Shailesh R Gandhi vs Ramchandra R Gandhi

carbpl18386 of 2026.doc
Shabnoor
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION (L) NO.18386 OF 2026
1. Shailesh R. Gandhi
2. Bela S. Gandhi
3. Vadilal Dairy International Ltd.
(earlier known as Super Milk
Makers Private Limited)
… Petitioners
Vs.
1. Late Ramchandra R. Gandhi
2. Late Bhantumatiben R. Gandhi
3. Virendrabhai R. Gandhi
4. Ilaben V. Gandhi
5. Rajesh R. Gandhi
6. Mamataben R. Gandhi
7. Dharini V. Gandhi
8. Khevna V. Gandhi
9. Nilaben R. Modi
10. Late Nitaben P. Surti
11. Late Ushaben N. Modi
12. Nayanaben S. Choksi
13. Devanshu L. Gandhi
14. Late Pushpaben L. Gandhi
15. Harshaben V. Gandhi
16. Late Sharmishthaben P. Surti
17. Vadilal International Private Ltd.
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18 Vadilal Industries Ltd.
19. Vadilal Industries USA, Inc.
… Respondents
Mr. Mustafa Doctor, Senior Advocate with Mr. Rohaan
Cama, Mr. Hiren Kamod, Ms. Spenta Kapadiya, Mr.
Kyrus Modi, Mr. Faraz Alam Sagar, Mr. Surya Sambyal,
Ms. Aarti Abhjyankar, Ms. Aditi Goyal, Ms. Urja
Dhapre, and Mr. Prateek Ayyappan i/by IndusLaw for
the petitioner.
Mr. Venkatesh R. Dhond, Senior Advocate with Ms.
Shalaka Patil, Mr. Ankit Pathak, Mr. Amaan Rahman,
and Mr. Harsh Khanchandani i/by Trilegal for
respondent Nos.3 to 8.
Mr. Shyam Kapadia with Ms. Shalaka Patil, Mr. Ankit
Pathak, Mr. Amaan Rahman, and Mr. Harsh
Khanchandabi i/by Trilegal for respondent No.13.
Mr. Shiraz Rustomjee, Senior Advocate with Mr. Prattek
Pai, Mr. Ankit Pathak, Mr. Amaan Rahman, and Mr.
Harsh Khanchandani i/by Trilegal for respondent
No.17.
Mr. Zal Andhyarujina, Senior Advocate with Mr. Ativ
Patel, Ms. Viloma Shah, Mr. Harshad Vyas, and Mr.
Viraj Raiyani i/by AVP Partners for respondent No.18.
CORAM : AMIT BORKAR, J.
RESERVED ON : JUNE 24, 2026
PRONOUNCED ON : JUNE 30, 2026
I N D E X
Sr. Paragraph
Particulars
No. Nos.
1. Introduction. Nature of Petition and Reliefs Claimed 1 to 3
2. Parties to the Proceedings and Their Relationship 4 to 8
Background of the Vadilal Family Business and Genesis of
3. 9 to 10
the Dispute
Family Settlement dated 30 March 1993 and Parent
4. 11 to 12
Agreement
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Sr. Paragraph
Particulars
No. Nos.
Branding Agreement, Irrevocable Power of Attorney and
5. 13 to 19
Registered User Agreement
Subsequent Events, Alleged Interference and Termination of
6. 20 to 23
Rights
7. Submissions on behalf of the Petitioners 24 to 44
8. Submissions on behalf of Respondent Nos. 3 to 8 and 13 45 to 108
9. Submissions on behalf of Respondent No. 18 109 to 115
10. Introduction and Scope of Consideration under Section 9 116 to 118
Whether the Memorandum of Agreement is the Parent
11. 119 to 126
Agreement Governing the Family Settlement
Relationship Between the Parent Agreement, Branding
12. Agreement, Irrevocable Power of Attorney and Registered 127 to 135
User Agreement
Effect of Separate Agreements on the Arbitration Clause.
13. Applicability of M.R. Engineers, Duro Felguera and Other 136 to 145
Authorities
Prima Facie Nature of the Four Agreements as One
14. 146 to 148
Composite Family Settlement
Effect of Non Signatories. Respondent Nos.17 and 18.
15. 149 to 166
Group of Companies Doctrine and Proposed Merger
Interpretation of Clause 10.1 of the Memorandum of
16. 167 to 173
Agreement and Territorial Jurisdiction
Effect of Termination of the Registered User Agreement
17. 174 to 180
During Pendency of the Disputes
Principles Governing Grant of Interim Protection under
18. 181
Section 9
19. Prima Facie Case 182 to 188
20. Balance of Convenience 189 to 197
21. Irreparable Injury 198 to 209
22. Conclusions and Prima Facie Findings 210
23 Operative Directions and Interim Relief 211 onwards
JUDGMENT:
1. The petitioners have filed this petition under Section 9 of the
Arbitration and Conciliation Act, 1996 read with Section 10 of the
Commercial Courts Act, 2015. They are asking for interim
protection of certain rights which, according to them, they have
been continuously enjoying for the last about 33 years. Their case
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is that these rights came to them under a family settlement entered
into in the year 1993. Under that settlement, they were given
exclusive rights to manufacture and sell ice cream and some other
products under the brand name "Vadilal" in certain specified areas,
including the State of Maharashtra. The petitioners contend that
because of some recent actions of the respondents, they have a
genuine apprehension that the respondents may act contrary to the
family settlement and other related agreements and interfere with
their long-standing business. According to them, such acts may
disturb their business of manufacturing, selling, and marketing ice
cream and other products under the "Vadilal" brand, which they
have been carrying on for more than three decades. Therefore,
they have approached this Court seeking urgent interim protection.
2. The petitioners have invoked the jurisdiction of this Court by
relying upon Clause 10.1 of the Memorandum of Agreement dated
30 March 1993. According to them, the said clause clearly provides
that the Memorandum of Agreement, the other understandings
between the parties and all agreements executed pursuant to those
understandings shall be governed by arbitration under the Indian
Arbitration Act, 1940. It further provides that if any dispute arises
between the parties regarding the agreement or its interpretation,
such dispute shall be referred to arbitration. If both parties agree
upon one arbitrator, the dispute shall be decided by such sole
arbitrator. If there is no agreement, each party can nominate one
arbitrator and those arbitrators shall appoint an Umpire. The
clause also states that the arbitration proceedings shall be subject
to the jurisdiction of the territory of the party other than the party
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whose conduct has made the arbitration necessary.
3. According to the petitioners, in the present case it is the
conduct of the respondents which has made the arbitration
proceedings necessary. They, therefore, submit that under the
agreed terms, jurisdiction would lie with the Court within the
territory where the petitioners are situated, namely Bombay or
Mumbai. It is further their case that the cause of action has also
arisen within Mumbai because the petitioners carry on their
business there and the effect of the respondents' alleged actions
will also be suffered there. On this basis, the petitioners contend
that Mumbai is the seat of arbitration and this Court has
jurisdiction to entertain and decide the present petition under
Section 9 of the Arbitration and Conciliation Act, 1996.
4. Petitioner Nos. 1 and 2 are Mr. Shailesh R. Gandhi and his
wife Mrs. Bela S. Gandhi. They are acting in their individual
capacity as well as on behalf of their children, Mr. Rahil S. Gandhi
and Mrs. Rhea S. Gandhi. According to the petitioners, they
represent the Bombay Group of the Vadilal business. It is their case
that the rights of the Bombay Group under the family settlement of
1993 are exercised through petitioner No. 3.
5. Petitioner No. 3, Vadilal Dairy International Limited, earlier
known as Super Milk Makers Private Limited, is a company
incorporated under the Companies Act, 1956. Its registered office
is situated at Plot No. M 13, MIDC Industrial Area, Tarapur, Boisar,
Palghar, Maharashtra. According to the petitioners, after the family
settlement of 1993 between the Bombay Group and the
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Ahmedabad Group, this company, which belongs to the Bombay
Group, has been exclusively carrying on the business of
manufacturing, selling and distributing ice cream and juices under
the "Vadilal" brand in the States of Maharashtra, Goa, Karnataka,
Kerala and Andhra Pradesh, including Telangana.
6. Respondent Nos. 1 to 16 are stated to be members of the
Gandhi family representing the Ahmedabad Group of the Vadilal
business. According to the petitioners, for the purpose of the
present dispute, the Ahmedabad Group exercises its rights under
the 1993 family settlement through respondent No. 17.
7. Respondent No. 17, Vadilal International Private Limited,
earlier known as Vadilal International Limited, has its registered
office at Vadilal House, Shrimali Society, Ahmedabad. According to
the petitioners, under the family settlement of 1993, this company
belongs to the Ahmedabad Group and has been carrying on the
business of manufacturing, selling and distributing ice cream and
juices under the "Vadilal" brand in all territories except those
exclusively allotted to the Bombay Group. It is further stated that
respondent No. 18, Vadilal Industries Limited, is the holding
company of the Ahmedabad Group. According to the petitioners,
respondent No. 17, along with certain other companies of the
Ahmedabad Group, is proposed to be merged with respondent No.
18 and, under the proposed scheme, all obligations, and liabilities
of respondent No. 17 arising from the 1993 family settlement
agreements will stand transferred to respondent No. 18.
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8. Respondent No. 19, Vadilal Industries USA Inc., is stated to
be a subsidiary of respondent No. 17 carrying on business in the
United States of America. According to the petitioners, this
respondent had filed proceedings before the United States District
Court for the District of Maryland seeking to prevent the
petitioners from exporting their ice cream products. The
petitioners state that those proceedings were unsuccessful, but
according to them, they have adversely affected their business
rights, the details of which are set out later in the petition.
9. According to the petitioners, late Mr. Ranchhodlal Vadilal
Gandhi originally started the Vadilal business. Thereafter, his sons,
respondent No. 1, Mr. Ramchandra Gandhi, and late Mr. Laxman
Gandhi, joined the business. In due course, the next generation
also became part of the business, including the sons of respondent
No. 1, namely respondent No. 3, Mr. Virendra Gandhi, petitioner
No. 1, Mr. Shailesh Gandhi, and respondent No. 5, Mr. Rajesh
Gandhi, along with the son of late Mr. Laxman Gandhi, namely,
respondent No. 13, Mr. Devanshu Gandhi.
10. According to the petitioners, during the years 1992 and
1993, differences arose regarding the future development and
management of the Vadilal business between petitioner No. 1 and
the other family members. These differences ultimately resulted in
two separate groups within the Gandhi family, namely the Bombay
Group and the Ahmedabad Group. The petitioners state that this
led to a family settlement by which the business was divided
between the two groups. According to them, the present dispute
has arisen out of that family settlement, which was recorded
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through the Parent Agreement or Memorandum of Agreement.
They further state that for implementing the Parent Agreement,
the Branding Agreement, the Irrevocable Power of Attorney and
the Registered User Agreement were executed simultaneously.
11. On 30 March 1993, the Bombay Group and the Ahmedabad
Group entered into a Memorandum of Agreement, described as the
Parent Agreement. According to the petitioners, this agreement
was executed for restructuring the Vadilal Group and recording the
manner in which the business would be divided between the two
groups. The petitioners state that the recitals of the Parent
Agreement specifically provided that the business of the Bombay
Group would consist of petitioner No. 3, then known as Super Milk
Makers Private Limited, together with the Bombay Division of
Vadilal Enterprises Limited. According to them, ownership,
effective control and management of those businesses were given
to the Bombay Group. They further state that all other companies
and business centres mentioned in Schedule I of the Parent
Agreement formed part of the Ahmedabad Group and were to
remain under its ownership, control and management. According
to the petitioners, under the Parent Agreement, the Bombay Group
agreed to transfer its shareholding in Vadilal International Limited,
now respondent No. 17, in favour of the Ahmedabad Group. They
contend that this transfer was made only on the clear
understanding that the Bombay Group would receive irrevocable
operative rights to use the "Vadilal" brand in its exclusive
territories. They rely upon Clause 2.2 of the Parent Agreement,
which records that the transfer of shares would take place only
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after such operative rights were granted in a manner satisfactory
to the Bombay Group. They also rely upon Clause 5.1, which
provides for execution of the Registered User Agreement and an
Irrevocable Power of Attorney to enable the Bombay Group to
execute Registered User Agreements on behalf of respondent No.
17 in respect of its exclusive territory. The petitioners further rely
upon Clause 4.3(a), which provides that respondent No. 17 would
not charge royalty from petitioner No. 3 for use of the "Vadilal"
brand after 1 April 1992 because another Registered User
Agreement was being executed with effect from that date.
According to the petitioners, the Parent Agreement itself
contemplated execution of an Irrevocable Power of Attorney by
respondent No. 17 in favour of the Bombay Group for conferring
ownership related and user rights in respect of the "Vadilal" logo
and trademarks within the exclusive territories of the Bombay
Group. It is their case that the agreement also recognised the right
of the Bombay Group to execute Registered User Agreements on
behalf of respondent No. 17. In support of this contention, the
petitioners have again relied upon Clause 5.1 of the Parent
Agreement, which records that these documents were executed
simultaneously with the Parent Agreement for use of the existing
and future trademarks and logos.
12. Clause 6.1.2 of the Parent Agreement, according to the
petitioners, specifically divided the territories for sale of ice cream
and juices between the two groups. Under this clause,
Maharashtra, Goa, Karnataka, Kerala and Andhra Pradesh,
including Telangana, were allotted exclusively to the Bombay
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Group. All remaining territories in India, except these specified
areas, were allotted exclusively to the Ahmedabad Group.
According to the petitioners, the above provisions of the Parent
Agreement clearly show that the rights created under the
agreement, and subsequently reflected in the 1993 Family
Settlement Agreements, were intended to be permanent in nature
and were neither transferable nor capable of being terminated.
The petitioners further contend that the Parent Agreement
expressly provides that all disputes arising out of the family
settlement and the connected agreements are required to be
resolved through arbitration in accordance with Clause 10.1 of the
Parent Agreement.
13. According to the petitioners, to implement the Parent
Agreement, the parties simultaneously executed the Branding
Agreement, the Irrevocable Power of Attorney and the Registered
User Agreement on 30 March 1993. These documents are
collectively referred to as the 1993 Family Settlement Agreements.
It is further their case that Bela Investment and Finance Company
Private Limited and Petitioner Nos. 1 and 2 were appointed as
constituted attorneys of respondent No. 17 under the Irrevocable
Power of Attorney. The petitioners contend that the Branding
Agreement, the Irrevocable Power of Attorney and the Registered
User Agreement all arise out of and form an integral part of the
Parent Agreement. According to them, these documents were
executed to maintain the identity of the brand, clearly divide the
domestic territories between the two groups and enable each
group to independently conduct its business within the rights given
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under the family settlement. According to the petitioners, along
with the Parent Agreement, the parties also executed the Branding
Agreement on 30 March 1993 for regulating the use of the
"Vadilal" brand by both groups. It is their case that this agreement
formed part of the consideration given to the Bombay Group in
return for giving up its shareholding in the company holding the
brand.
14. The petitioners state that the Branding Agreement provided
that, in respect of products other than ice cream and juices, both
groups could either create a completely new brand or use a double
branded logo together with the "Vadilal" brand. According to them,
the agreement prescribed specific proportions for such double
branding so that parity between both groups could be maintained.
They contend that these provisions were in furtherance of the
Parent Agreement under which brand rights were to be conferred
only after simultaneous execution of the Branding Agreement, the
Registered User Agreement and the Irrevocable Power of Attorney.
According to the petitioners, Clause 4.1 of the Branding Agreement
is of particular importance because it provides that overseas
markets, except in relation to restricted goods, are open to both
groups on a non exclusive basis. They contend that this clause
recognises that while domestic territories were divided exclusively
between the two groups, both groups were free to expand their
business in foreign countries subject to compliance with the agreed
conditions relating to branding. The petitioners further contend
that Clause 2.1 of the Branding Agreement records that the
Bombay Group surrendered its shareholding and representation on
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the Board of Vadilal International Limited in return for obtaining
perpetual operative rights to use the "Vadilal" brand. They rely
upon the clause to contend that both groups were permitted to
continue using the existing brand names and trade names in
respect of the businesses and products specifically identified in the
agreement. According to the petitioners, Clause 6.2 of the
Branding Agreement specifically required Vadilal International
Limited, respondent No. 17, to grant an Irrevocable Power of
Attorney permitting use of the "Vadilal" brand by the Bombay
Group for ice cream and juices within its exclusive territories. They
submit that this provision was directly linked with Clause 2.2 of
the Parent Agreement and shows that the Bombay Group agreed to
transfer its ownership interest in respondent No. 17 only because
irrevocable brand rights were simultaneously granted in its favour.
The petitioners contend that the Branding Agreement cannot be
read separately from the Parent Agreement because it was
executed as part of the same family settlement. According to them,
the provisions relating to double branding, overseas business and
use of logos were intended to maintain the balance of rights
between the two groups. It is therefore their case that if the
Branding Agreement is treated independently or brought to an
end, the very object of the 1993 Family Settlement Agreements
would stand defeated.
15. According to the petitioners, respondent No. 17 executed an
Irrevocable Power of Attorney on 30 March 1993 in favour of Bela
Investment and Finance Company Private Limited, petitioner No. 1
and petitioner No. 2. They contend that this document was
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executed to ensure effective implementation of the Registered User
Agreement contemplated under the family settlement and to
secure the Bombay Group's continuing rights to use the "Vadilal"
brand. The petitioners further state that the Irrevocable Power of
Attorney specifically recognised respondent No. 17 as the
registered proprietor of the "Vadilal" trademarks under the Trade
and Merchandise Marks Act, 1958. According to them, Part D of
the Irrevocable Power of Attorney reinforced Clause 5.1 of the
Parent Agreement by providing for simultaneous execution of the
Registered User Agreement and the Irrevocable Power of Attorney
so that operative rights could be effectively granted to the Bombay
Group. They further state that, acting under the authority given by
the Irrevocable Power of Attorney, petitioner No. 3 entered into a
Registered User Agreement dated 1 April 1993 with Bela
Investment and Finance Company Private Limited. According to
the petitioners, the Irrevocable Power of Attorney also authorised
the representatives of the Bombay Group to independently protect
and enforce the rights relating to the "Vadilal" brand without
interference from the Ahmedabad Group. It is further their case
that the document also bound respondent No. 17 and its
successors to recognise and ratify all acts validly done by such
authorised representatives in exercise of the powers granted under
the said document. According to the petitioners, the Irrevocable
Power of Attorney also authorised the representatives of the
Bombay Group to independently protect and enforce the rights
relating to the "Vadilal" brand without any obstruction from the
Ahmedabad Group. It is their case that respondent No. 17 and any
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company which may subsequently take over its rights or merge
with it were also bound to recognise and accept all lawful acts
done by these authorised persons under the Power of Attorney.
According to the petitioners, this arrangement ensured that any
future merger, restructuring or change in the corporate structure
would not affect or reduce the rights already vested in the Bombay
Group. The petitioners contend that the Irrevocable Power of
Attorney is an important document forming part of the 1993
Family Settlement Agreements. According to them, it gives
practical effect to the Parent Agreement, supports the Branding
Agreement and secures the Bombay Group's permanent rights to
use the "Vadilal" brand. They submit that these rights were granted
because the Bombay Group had given up its shareholding and
management rights in respondent No. 17. It is therefore their case
that if the Irrevocable Power of Attorney is revoked or treated
separately from the other agreements, the very purpose of the
1993 Family Settlement Agreements would be defeated.
16. According to the petitioners, although the right to use the
"Vadilal" brand was created through the Parent Agreement, the
Branding Agreement and the Irrevocable Power of Attorney,
respondent No. 17 also executed a Registered User Agreement on
30 March 1993 in favour of petitioner No. 3. This agreement was
in the standard form attached to the Irrevocable Power of Attorney.
The petitioners state that it was executed only to implement the
rights already created under the earlier agreements. They further
submit that every person or company permitted to use the "Vadilal"
brand, whether appointed by the Bombay Group or the
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Ahmedabad Group, is required to execute a similar Registered User
Agreement. According to the petitioners, the Registered User
Agreement is the document through which the Bombay Group
actually exercises its right to use the "Vadilal" trademarks in its
exclusive territories. It was executed to give effect to Clauses 2.2
and 5.1 of the Parent Agreement. The petitioners further submit
that this agreement also enabled the Bombay Group to take legal
action if any third party infringed the "Vadilal" trademarks within
its exclusive territories. The petitioners submit that the Registered
User Agreement specifically records that petitioner No. 3 is the
exclusive registered user of the "Vadilal" trademarks in the States
of Maharashtra, Goa, Karnataka, Kerala and Andhra Pradesh,
including Telangana. According to them, Recital C and Clauses 1 to
3 of the agreement clearly show that this licence is exclusive and
enforceable within these territories. They further contend that this
territorial arrangement is in accordance with Clause 6.1.2 of the
Parent Agreement, which had already divided the territories
between the Bombay Group and the Ahmedabad Group. According
to the petitioners, the Registered User Agreement also requires
petitioner No. 3 to maintain the quality of its products. Clause 5
provides that all directions, standards, specifications and quality
requirements prescribed by the proprietor must be followed. It also
states that if these requirements are not complied with, petitioner
No. 3 would have to recall the products after receiving written
notice. However, the petitioners point out that till date the
respondents have never issued any such directions, standards or
quality requirements under Clause 5 of the agreement.
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17. The petitioners further submit that Clause 11 of the
Registered User Agreement requires petitioner No. 3 to obtain all
necessary permissions and comply with all applicable laws relating
to manufacture, sale and distribution of Vadilal products, including
the Prevention of Food Adulteration Act, 1954. According to them,
this obligation is also reflected in the Irrevocable Power of
Attorney, where the representatives of the Bombay Group had
undertaken to ensure compliance with all statutory requirements.
18. According to the petitioners, Clause 14 of the Registered
User Agreement clearly provides that petitioner No. 3 is not
required to pay any royalty, fee, or commission to respondent No.
17 for use of the "Vadilal" brand. They submit that the only
consideration under the agreement was the mutual promises and
obligations accepted by both sides. The petitioners further point
out that Clause 15 provides that the agreement will continue
indefinitely. According to them, this shows that the agreement was
not an ordinary commercial licence but was a part of the family
settlement under which the Bombay Group received permanent
and irrevocable rights in the "Vadilal" brand after giving up its
shareholding and management rights in respondent No. 17. The
petitioners submit that although Clause 16 of the Registered User
Agreement contains a provision regarding termination, the said
clause is only a standard clause found in the prescribed format of
the agreement. According to them, since the Registered User
Agreement forms part of the family settlement and was executed
along with the Irrevocable Power of Attorney, the termination
clause cannot be read in isolation so as to defeat the permanent
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rights created under the family settlement. According to the
petitioners, the Registered User Agreement is the operative
document through which the Bombay Group exercises its rights in
the "Vadilal" brand. They contend that this agreement is
inseparably connected with the Parent Agreement and the
Irrevocable Power of Attorney, and all these documents together
maintain the balance of rights created under the family settlement.
It is therefore their case that any attempt to treat the Registered
User Agreement separately or to terminate it would defeat the
object of the 1993 Family Settlement Agreements.
19. The petitioners, therefore, submit that the combined reading
of Clauses 2.2 and 5.1 of the Parent Agreement, Clauses 2.2 and
6.2 of the Branding Agreement, Part D of the Irrevocable Power of
Attorney, and Recital C together with Clauses 1 to 3 of the
Registered User Agreement clearly shows that after the Bombay
Group gave up its shareholding in respondent No. 17, it was
granted permanent and irrevocable rights to use the "Vadilal"
brand within its exclusive territories.
20. According to the petitioners, from the year 1993 till the year
2025, they carried on their business without any interference.
During this period, disputes had arisen only among the members
of the Ahmedabad Group. The petitioners state that after those
disputes were settled during the years 2024 and 2025, the
respondents started taking various steps against the petitioners.
According to them, these actions included filing legal proceedings
in the United States and issuing legal notices in India. The
petitioners further contend that since the respondents could not
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obtain any adverse order against petitioner No. 3 in the
proceedings before the United States Court, they thereafter
adopted various other actions, as stated in the petition, with the
intention of disturbing the petitioners' business and putting
pressure upon them to accept a buy out on terms favourable to the
Ahmedabad Group.
21. According to the petitioners, for giving effect to the partition
and restructuring of the Vadilal Group, four documents were
executed on 30 March 1993. These documents together are
referred to as the 1993 Family Settlement Agreements. They
consist of the Parent Agreement, the Branding Agreement, the
Irrevocable Power of Attorney and the Registered User Agreement.
According to the petitioners, all these documents were executed
together as part of one common arrangement for implementing the
family settlement.
22. The petitioners contend that under the 1993 Family
Settlement Agreements, they were granted permanent and
irrevocable rights to use the "Vadilal" brand in their exclusive
territories, namely Maharashtra, Goa, Karnataka, Kerala and
Andhra Pradesh, including Telangana. According to them, these
rights were given in consideration of the Bombay Group giving up
its shareholding in respondent No. 17 and other group companies
as part of the family settlement. According to the petitioners, the
Parent Agreement is the main document governing the family
settlement and contains the terms relating to the restructuring of
the Vadilal Group and the rights of both groups. It is their case that
the Parent Agreement, among other things, provides that the
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Bombay Group would transfer all its shares in respondent No. 17
and other group companies to the Ahmedabad Group. At the same
time, the Bombay Group would retain petitioner No. 3 and would
have the exclusive right to manufacture and sell products under
the "Vadilal" brand in its allotted territories, while the Ahmedabad
Group would have similar rights in the remaining parts of India.
The petitioners further submit that the Parent Agreement also
contemplated execution of three other documents, namely the
Branding Agreement, the Irrevocable Power of Attorney and the
Registered User Agreement, for giving effect to its terms. It also
provides that any dispute arising under the Parent Agreement or
the connected agreements would be resolved through arbitration.
23. According to the petitioners, on 26 May 2026, respondent
No. 17 issued a communication purporting to terminate the
Registered User Agreement and the Irrevocable Power of Attorney
executed in favour of the petitioners. The petitioners contend that
on the strength of this alleged termination, respondent No. 17 has
also sought to interfere with and prevent the petitioners from
exercising their right to use the "Vadilal" brand, which according to
them has been granted under the 1993 Family Settlement
Agreements.
24. Mr. Doctor, learned Senior Advocate appearing for the
petitioners submitted that the entire stand taken by the
respondents is against the understanding reached between the
members of the Gandhi family in the year 1993. According to him,
the respondents are reading every agreement separately though all
four documents were executed on the same day for carrying out
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one common family arrangement. He submitted that the
respondents are proceeding only on the basis that once the
Registered User Agreement is terminated, every right of the
petitioners to use the "Vadilal" name automatically comes to an
end. According to him, this approach is completely incorrect
because the Registered User Agreement cannot be separated from
the Parent Agreement, the Branding Agreement and the
Irrevocable Power of Attorney. He submitted that all these
documents were executed together for giving effect to one family
settlement and, therefore, they have to be read together. According
to him, if one document alone is picked up and interpreted
without reading the remaining documents, the true intention of
the parties will not become clear, and the entire family
arrangement will get disturbed.
25. Learned Senior Counsel further submitted that throughout
the hearing the respondents repeatedly described the petitioners
only as licensees of the "Vadilal" brand. According to him, this itself
shows that the respondents have misunderstood the nature of the
arrangement between the parties. He submitted that the
petitioners are not outsiders who were granted a commercial
licence on payment of consideration. They are members of one
branch of the Gandhi family itself. According to him, after division
of the family business, both branches agreed that each branch
would continue carrying on business under the "Vadilal" name in
its respective territory. Therefore, the right claimed by the
petitioners does not arise because respondent No.17 granted them
any ordinary licence. It arises because both branches accepted such
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arrangement while settling the family disputes. Learned Senior
Counsel relied upon Clause 2.1 of the Branding Agreement and
submitted that both groups were allowed to continue using the
"Vadilal" name for their businesses. According to him, this clearly
shows that both branches received corresponding rights under the
family settlement and the arrangement was never intended to
remain dependent upon the wishes of one branch alone.
26. Learned Senior Counsel then submitted that the respondents
are trying to support the termination by placing reliance upon
Recital A of the Registered User Agreement. According to him, the
respondents contend that every right regarding the "Vadilal" brand
flows only from that agreement because the recital refers to the
registered "Vadilal" trademark along with other trademarks
mentioned in the Schedule. According to him, this interpretation is
not correct. He submitted that while reading the recital the
respondents have ignored the actual language used in the
document and have also ignored the distinction which has been
carefully maintained in the different family settlement documents.
According to him, the respondents are attempting to enlarge the
scope of the Registered User Agreement far beyond what the
parties themselves intended while executing it.
27. Learned Senior Counsel further submitted that the
respondents have overlooked the important words "Registered
Trade Mark" appearing immediately before the word "Vadilal" in
Recital A. According to him, they have also ignored that both the
Branding Agreement and the Registered User Agreement
themselves make it clear that the Registered User Agreement was
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confined only to the registered trademarks specifically described in
its Schedule. He submitted that the respondents have nowhere
pleaded that on 30 March 1993 the word mark "Vadilal" itself
stood registered in the broad manner now suggested by them.
According to him, therefore, the reference in Recital A can only
relate to the six registered trademarks mentioned in the Schedule
and cannot be stretched to cover every right connected with the
"Vadilal" brand. Learned Senior Counsel further submitted that
even if any doubt remains after reading the Registered User
Agreement, the Branding Agreement itself removes that doubt.
According to him, the Branding Agreement has deliberately
created two different categories. One category consists of the
existing brand names and trade names mentioned in Annexure I.
The other consists of the registered trademarks mentioned in
Annexure-II. According to him, the agreement itself treats these
two categories differently and, therefore, the respondents are not
justified in treating them as one and the same.
28. Learned Senior Counsel thereafter invited attention to the
Branding Agreement and submitted that Item No.1 of Annexure I
specifically mentions the brand name "Vadilal". According to him,
the agreement itself permits both branches of the Gandhi family to
continue using the existing brand names and trade names
mentioned in Annexure I for carrying on their respective
businesses. He submitted that this right was never made
dependent upon execution or continuance of the Registered User
Agreement. According to him, the parties intended that such right
should continue permanently as an important part of the
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consideration under the Family Settlement. Therefore, according to
him, the respondents cannot now say that such right has
automatically come to an end only because they claim to have
terminated the Registered User Agreement. Learned Senior
Counsel further submitted that the Branding Agreement separately
provides that the registered trademarks mentioned in Annexure II
would be dealt with through the Registered User Agreement and
the Irrevocable Power of Attorney. He pointed out that Annexure II
contains only six registered "Vadilal" trademarks and those are the
very same six trademarks mentioned in the Schedule to the
Registered User Agreement. According to him, this clearly shows
that the Registered User Agreement was intended to operate only
regarding those six registered marks and was never intended to
become the source of every right relating to the "Vadilal" brand.
29. Learned Senior Counsel further submitted that the
Registered User Agreement came into existence only because the
Trade and Merchandise Marks Act, 1958 required execution of
such an agreement before a person could be registered as a
registered user of a registered trademark. According to him, this
statutory requirement alone explains why the Schedule to the
Registered User Agreement specifically mentions six registered
trademarks together with their registration numbers. He submitted
that the purpose of executing that document was only to satisfy
the legal procedure under the Trade Marks law. According to him,
it was never intended to create entirely fresh rights in favour of the
petitioners. He therefore submitted that the Registered User
Agreement applies only to the six registered trademarks mentioned
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in its Schedule. Even assuming for the sake of argument that the
respondents have validly terminated that agreement, which the
petitioners strongly dispute, such termination cannot take away
the independent right of the petitioners to use the "Vadilal" brand
flowing from the Parent Agreement and the Branding Agreement.
According to him, the respondents are wrongly trying to convert
termination of one implementing document into extinction of
rights created under the larger Family Settlement. He submitted
that such action itself amounts to breach of the Parent Agreement
as well as the Branding Agreement.
30. Learned Senior Counsel further submitted that
communication dated 26 May 2026 issued by respondent No.17,
whereby it purported to terminate the Registered User Agreement,
revoke the Irrevocable Power of Attorney and also declare that the
Branding Agreement no longer survives, is wholly illegal, and
contrary to the contractual arrangement between the parties.
According to him, the respondents have proceeded on the
allegation that the petitioners committed continuing breaches of
Clauses 5 and 11 of the Registered User Agreement. He submitted
that respondent No.17 has relied upon several notices issued from
13 September 2025 onwards and has contended that the alleged
breaches continued for more than 180 days without being
rectified. Learned Senior Counsel submitted that every one of
those allegations has been specifically denied by the petitioners
and, therefore, according to him, the respondents were not
justified in taking such drastic action.
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31. Learned Senior Counsel also submitted that although the
respondents repeatedly relied upon laboratory reports for making
allegations regarding the quality of the petitioners' products,
copies of those reports were never supplied along with the notices
beginning from 13 September 2025. According to him, those
reports were made available only on 13 March 2026 after expiry of
the alleged contractual period of 180 days given for curing the
defects. He submitted that the respondents have therefore sought
to terminate the agreement by relying upon documents which
were not even supplied to the petitioners during the very period in
which they were expected to remove the alleged defects.
According to him, such a course is neither fair nor in accordance
with the contractual requirements because a party cannot be
expected to answer allegations or rectify defects without first being
supplied with the material relied upon against it.
32. Learned Senior Counsel further submitted that every notice
issued between 13 September 2025 and 3 December 2025 was
based only on the allegation that the petitioners were required to
recall their products because of alleged breach of the Food Safety
and Standards Regulations, particularly Table 2B contained in
Appendix B. According to him, throughout this period the
respondents consistently maintained that the products
manufactured by the petitioners were liable to be recalled on that
basis. It was, therefore, submitted that the entire foundation of the
respondents' action was based upon those alleged violations alone.
33. Learned Senior Counsel submitted that by a detailed reply
dated 24 February 2026 the petitioners specifically pointed out
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that the laboratory reports relied upon by the respondents did not
show presence of Salmonella or Listeria. According to him, these
were the only microbiological parameters relevant under Table 2B
for the products manufactured by the petitioners. He submitted
that after receiving this reply, the respondents themselves changed
the basis of their allegations. Instead of continuing with the
original case based upon Table 2B, they started relying upon
different provisions of the Food Safety and Standards Act and the
Regulations. According to him, this change itself shows that the
earlier allegations could not be supported and, therefore, the
respondents attempted to justify their action on a different basis.
34. Learned Senior Counsel further submitted that even the
process of collecting samples was not carried out in accordance
with the mandatory procedure prescribed under the Food Safety
and Standards Rules, 2011 and the microbiological sampling
guidelines issued by the FSSAI. According to him, every
microbiological report relied upon by the respondents relates only
to Table 2A of Appendix B, which deals with process hygiene
standards. He submitted that these standards are different from
the standards which determine whether a food product is legally
fit to be released into the market. According to him, the
respondents have ignored this distinction and have wrongly
treated process hygiene standards as though they were statutory
product safety standards. Learned Senior Counsel submitted that
this approach itself is legally incorrect and cannot become the
basis for terminating valuable rights claimed by the petitioners.
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35. Learned Senior Counsel also submitted that neither the
laboratory reports nor any other documents produced by the
respondents show that the samples were collected by following the
procedure prescribed under the Food Safety and Standards Rules
or the microbiological sampling guidelines issued by the FSSAI.
According to him, when the method of collecting samples itself
becomes doubtful, every laboratory report prepared on the basis of
such samples also becomes open to serious doubt. He therefore
submitted that such reports cannot legally form the foundation for
termination of the Registered User Agreement. According to him,
before taking such a serious step, the respondents were expected
to strictly comply with the prescribed procedure, which, according
to the petitioners, has not been done.
36. Learned Senior Counsel submitted that, on the contrary, the
petitioners themselves produced independent laboratory reports
along with their replies dated 17 October 2025 and 24 February
2026 showing that their products complied with the applicable
FSSAI standards. He further submitted that on 9 May 2026 an
FSSAI empanelled third party agency, namely, BSCIC Certifications
Private Limited, carried out a detailed audit of the manufacturing
facility of petitioner No.3. According to him, the audit examined as
many as 102 different parameters, awarded a compliance score of
96% and granted the highest A+ Compliance rating. Learned
Senior Counsel also pointed out that during more than thirty years
of business between the parties, the respondents had never earlier
insisted upon inspection of the petitioners' manufacturing units.
According to him, the sudden demand for inspection during
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February and March 2026 is not an ordinary contractual exercise
but forms part of the respondents' attempt to disturb the
petitioners' long-standing rights flowing from the Family
Settlement.
37. Learned Senior Counsel further submitted that both the
proposed arbitration and the present proceedings under Section 9
are founded upon Clause 10.1 of the Parent Agreement. According
to him, the arbitration clause has been drafted in wide language
and covers not only disputes arising under the Parent Agreement
but also disputes relating to the connected understandings and
agreements executed for implementing the Family Settlement. He
submitted that the objection raised by the respondents that
respondent Nos.17 and 18 are not parties to the Parent Agreement
and therefore cannot be referred to arbitration is completely
without merit. According to him, the arbitration clause cannot be
read in a narrow manner because the present dispute concerns
enforcement of rights arising from the entire Family Settlement
and all the connected agreements executed for giving effect to it.
Therefore, according to him, the arbitration clause fully applies to
the present controversy.
38. Learned Senior Counsel also submitted that all the four
agreements forming the 1993 Family Settlement were admittedly
executed on the same day and each document repeatedly refers to
the others. He pointed out that respondent No.17 itself is a
confirming party to the Branding Agreement. It has also now
issued the communication terminating the Registered User
Agreement and revoking the Irrevocable Power of Attorney.
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According to him, these actions directly interfere with the
petitioners' rights to continue using the "Vadilal" brand under the
Parent Agreement and the Branding Agreement. He, therefore,
submitted that the present dispute clearly arises out of the Family
Settlement and the connected agreements and, therefore, falls
within the scope of the arbitration clause contained in the Parent
Agreement.
39. Learned Senior Counsel further submitted that respondent
No.18 also cannot avoid the present proceedings by saying that it
is a stranger to the dispute. According to him, respondent No.18 is
the company in whose favour the respondents are proposing to
transfer the rights relating to the "Vadilal" brand under the scheme
pending before the National Company Law Tribunal. He further
submitted that respondent No.18 also played an active role in
obtaining the laboratory reports which have subsequently been
relied upon by respondent No.17 while issuing the termination
communication. According to him, respondent No.18 has not
remained a silent or formal party but has actively participated in
the acts which have ultimately resulted in the present dispute.
Therefore, it cannot now contend that it has no connection with
the controversy or that the arbitration proceedings cannot
continue against it.
40. In support of his submissions regarding the existence of the
arbitration agreement, the jurisdiction of the Arbitral Tribunal and
the binding effect of the Family Settlement upon the respondents,
Learned Senior Counsel placed reliance upon the judgments in
Girish Mulchand Mehta v. Mahesh S. Mehta, 2009 SCC OnLine
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Bom 1986 and ASF Buildtech Private Limited v. Shapoorji Pallonji
& Co Private Limited (2025) 9 SCC 76. According to him, these
decisions recognise that where several agreements form part of
one composite transaction or one family arrangement, the Court is
required to examine the entire arrangement as a whole and not
each document separately. He submitted that these judgments
support the petitioners' case that the disputes raised in the present
proceedings are capable of being referred to arbitration.
41. Learned Senior Counsel also submitted that the respondents
are not correct in contending that this Court has no territorial
jurisdiction merely because the petitioners have invoked
arbitration. According to him, this argument proceeds upon a
wrong interpretation of Clause 10.1 of the Parent Agreement. He
submitted that arbitration became necessary only because the
respondents attempted to interfere with the petitioners' continued
use of the "Vadilal" brand. Therefore, according to him, the party
which has necessitated the arbitration proceedings is the
respondents themselves and not the petitioners who merely
invoked the arbitration clause. Learned Senior Counsel further
submitted that before issuing the impugned communication, the
respondents had first filed trademark infringement proceedings
and proceedings relating to quality against the petitioners'
distributors before Courts in the United States. According to him,
those proceedings did not succeed because the United States Court
noticed the arbitration agreement between the parties and
observed that the disputes could appropriately be resolved by
arbitration. He submitted that thereafter the respondents changed
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their course and started making allegations regarding quality in
India, demanded recall of the petitioners' products and finally
issued the communication dated 26 May 2026 whereby they
purported to terminate the Registered User Agreement and also
asserted that the petitioners had lost every right to use the "Vadilal"
brand.
42. Learned Senior Counsel therefore submitted that the present
disputes have arisen entirely because of the conduct of the
respondents. According to him, the petitioners have not created
any fresh rights for themselves but have only approached this
Court for protection of rights which already existed under the
Family Settlement and the connected agreements. He, therefore,
submitted that, in view of Clause 10.1 of the Parent Agreement,
this Court possesses the necessary territorial jurisdiction to
entertain and decide the present petition under Section 9 of the
Arbitration and Conciliation Act.
43. Learned Senior Counsel lastly submitted that the present
dispute directly arises from a family settlement honestly entered
into between members of the same family. According to him, it is a
settled principle that Courts ordinarily lean in favour of preserving
family settlements because such settlements are intended to
maintain peace, avoid future disputes and permanently distribute
rights and obligations between different branches of the family. He
submitted that such arrangements should not be unsettled on
technical grounds when the conduct of the parties for several years
shows that the arrangement has been acted upon. In support of
this submission, reliance has been placed upon the decisions in
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Kale & Ors. v. Deputy Directors of Consolidation & Ors. (1976) 3
SCC 119, and Hari Shankar Singhania & Ors. v. Gauri Hari
Singhania & Ors. (2006) 4 SCC 658.
44. Learned Senior Counsel, therefore, submitted that the
petitioners have made out a clear case for grant of interim
protection during the pendency of the arbitral proceedings and
also for the statutory period thereafter. According to him, the
petitioners have continuously carried on business under the
"Vadilal" brand for more than three decades without any earlier
objection from the respondents and without any adverse finding
recorded by the competent statutory authorities regarding the
quality of their products. He submitted that over these years the
petitioners have established substantial goodwill, invested heavily
in their business and are providing employment to more than one
hundred persons. According to him, if the petitioners are suddenly
prevented from using the "Vadilal" brand, the loss of goodwill,
business reputation, market identity and employment cannot later
be adequately compensated by payment of money. On the other
hand, according to him, the respondents will not suffer any
comparable prejudice if the petitioners are permitted to continue
using the brand in the same manner in which they have done for
more than thirty years until the disputes are finally decided by the
learned Arbitral Tribunal.
45. Mr. Dhond, learned Senior Counsel appearing for respondent
Nos.3 to 8 and 13 first submitted that he would deal with what,
according to him, was the main argument raised by the petitioners
while making their rejoinder submissions. According to him, this
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argument is the real foundation of the entire case of the
petitioners. Therefore, before considering the other issues, this
point itself requires careful consideration because, according to
him, the remaining submissions of the petitioners proceed on this
very basis.
46. Learned Senior Counsel submitted that the petitioners are
trying to make a distinction between the Registered User
Agreement and the Branding Agreement. According to him, the
petitioners say that the Registered User Agreement applies only to
six registered trademarks mentioned in its Schedule and that those
trademarks are no longer being used. According to the petitioners,
all the other registered and unregistered marks together form the
"Vadilal" brand and their right to use that brand comes only from
the Branding Agreement. On this basis, the petitioners contend
that even if the Registered User Agreement has been terminated,
their right to continue using the "Vadilal" brand still survives.
47. Learned Senior Counsel submitted that this argument cannot
be accepted. According to him, all the products presently
manufactured and sold by the petitioners prominently display the
registered "Vadilal" trademark written inside a red oval device. He
submitted that this itself is a registered trademark. Therefore,
according to him, the petitioners cannot now say that they are not
using any registered trademark. He further submitted that the
petitioners are now attempting to argue that the trademark
presently used is different from the six trademarks mentioned in
the Schedule because it came to be registered later. According to
him, such a distinction has no legal basis.
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48. Learned Senior Counsel further submitted that Clause 7.8 of
the Branding Agreement itself answers this issue. According to
him, the clause clearly provides that whenever any future
trademark is registered, the right to use such trademark can arise
only through execution of another Registered User Agreement. He
submitted that the Branding Agreement by itself does not
automatically permit use of future registered trademarks.
According to him, whether the trademark is an existing one or one
registered later, the parties always intended that its use would
remain governed by a Registered User Agreement. He also relied
upon Recital A of the Registered User Agreement and submitted
that it supports this interpretation.
49. Learned Senior Counsel, therefore, submitted that the
petitioners must clearly explain the legal source from which they
claim the present right to use the registered "Vadilal" trademark.
According to him, if they say that the right flows from the
Registered User Agreement dated 30 March 1993, then that
agreement already stands terminated and any dispute regarding
such termination has to be decided by the competent Civil Court at
Ahmedabad. On the other hand, if they say that the present
trademark is outside the Registered User Agreement; then
according to him, they have no authority to use that registered
trademark because no separate Registered User Agreement has
ever been executed in respect of it. He further submitted that,
apart from this, even the rights claimed under the Branding
Agreement have already been brought to an end by the
communication dated 26 May 2026.
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50. Learned Senior Counsel submitted that the present
controversy arises out of four separate documents executed
between the parties, namely the Separation Agreement, the
Branding Agreement, the Registered User Agreement and the
Power of Attorney. According to him, although these agreements
were executed on the same day, each one was made for a different
purpose and each created different legal rights and obligations.
Therefore, according to him, they cannot all be treated as one
single agreement.
51. Learned Senior Counsel then explained the background in
which these documents came to be executed. According to him,
after disputes arose between the Bombay Group and the
Ahmedabad Group, the Separation Agreement divided the business
and profit making units between both groups. However, so far as
the "Vadilal" brand and trademark rights were concerned, the
Separation Agreement itself did not directly confer those rights.
According to him, it only contemplated that such rights would
thereafter be regulated through the Registered User Agreement
and the Power of Attorney, which would govern the manner in
which the parties could use the brand.
52. Learned Senior Counsel relied upon Clauses 2.2, 5.1 and
4.3(a) of the Separation Agreement. According to him, these
clauses themselves show that the parties intended the actual rights
relating to the "Vadilal" brand to arise under the Registered User
Agreement and the Power of Attorney. He submitted that the
Separation Agreement merely recorded the overall understanding
between the parties, whereas the detailed rights, obligations, and
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conditions relating to use of the brand were deliberately kept in
separate agreements.
53. On this basis, Learned Senior Counsel submitted that the
Separation Agreement by itself did not create any independent
right in favour of the petitioners to use the "Vadilal" brand.
According to him, the operative rights were granted only through
the Registered User Agreement and the Power of Attorney. He
submitted that these documents not only permitted use of the
brand but also imposed conditions regulating such use, and
therefore the petitioners cannot separate the rights from the
conditions contained in those agreements.
54. Learned Senior Counsel lastly submitted that the petitioners
themselves have admitted in the present petition that the
Registered User Agreement is the operative document through
which the Bombay Group has been using the "Vadilal" brand.
According to him, the rights granted under that agreement were
always limited and conditional. They were subject to quality
control, compliance with food safety requirements, inspection by
respondent No.17 and recall of products wherever necessary.
According to him, the parties intended that both the existing
registered trademarks and any future registered trademarks would
remain governed by the Registered User Agreement and its
conditions. Therefore, according to him, once that agreement
stands terminated, the petitioners cannot continue to claim any
independent right to use the registered "Vadilal" trademark.
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55. Learned Senior Counsel further submitted that the
Registered User Agreement created a complete contractual
relationship between the parties. According to him, this agreement
did not merely permit use of the "Vadilal" trademark but also
imposed several obligations upon the petitioners. He submitted
that the agreement contained provisions relating to quality control,
inspection, compliance with statutory requirements, termination in
case of continued breach and also an exclusive jurisdiction clause
in favour of the Courts at Ahmedabad. According to him, these
provisions clearly show that the parties intended this agreement to
independently govern their rights and obligations regarding use of
the trademark.
56. Learned Senior Counsel also referred to the Irrevocable
Power of Attorney executed by respondent No.17. According to
him, this document was not intended to create any separate or
independent right in favour of the petitioners. It was executed only
to facilitate execution of future Registered User Agreements and to
enable proper implementation of the arrangement regarding
registered trademarks. He submitted that the Power of Attorney
itself recognises the quality control mechanism and remains closely
connected with the Registered User Agreement. Therefore,
according to him, it cannot be treated as an independent source of
rights.
57. Learned Senior Counsel then relied upon the Branding
Agreement. According to him, even this agreement recognises that
where any logo or trademark is subsequently registered in the
name of respondent No.17, the right to use such registered mark
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can arise only through execution of a Registered User Agreement.
He further submitted that although the Branding Agreement
contains a clause regarding jurisdiction, it does not contain any
arbitration clause. According to him, this also shows that the
parties intentionally provided different methods for resolution of
disputes arising under different agreements.
58. Proceeding further, Learned Senior Counsel submitted that
the Branding Agreement itself recognises the importance of the
Registered User Agreement. According to him, rights relating to
the "Vadilal" brand, trademarks, and logos were intended to be
governed by the Registered User Agreement and not independently
by the Branding Agreement. Therefore, according to him, the
petitioners cannot rely only upon the Branding Agreement while
ignoring the conditions and restrictions contained in the
Registered User Agreement.
59. Learned Senior Counsel thereafter submitted that the
petitioners repeatedly violated the quality control obligations
contained in the Registered User Agreement. According to him,
repeated microbiological testing disclosed contamination in several
products manufactured by the petitioners. He submitted that
beginning from September 2025, several notices were issued
calling upon the petitioners to remove those defects. According to
him, despite sufficient opportunity being given, the breaches
continued. Therefore, respondent No.17 was left with no
alternative, but to issue the communication dated 26 May 2026
terminating the Registered User Agreement revoking the Power of
Attorney and informing the petitioners that their rights under the
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Branding Agreement also came to an end.
60. Learned Senior Counsel submitted that the petitioners are
not correct in saying that the termination was sudden or hurried.
According to him, the petitioners themselves invoked arbitration
on 10 March 2026, which was even before expiry of the
contractual cure period and much before the Registered User
Agreement was actually terminated on 26 May 2026. According to
him, this itself shows that the petitioners approached arbitration
even before the contractual process was completed.
61. Learned Senior Counsel further submitted that after issuing
the termination notice, respondent No.17 instituted a Civil Suit
before the City Civil Court at Ahmedabad seeking an injunction
restraining the petitioners from using the "Vadilal" trademarks.
According to him, the petitioners themselves have filed an
application under Section 8 of the Arbitration and Conciliation Act
in that suit. Therefore, according to him, the Ahmedabad Court is
already examining whether the disputes are arbitrable and
whether the jurisdiction lies before the Courts at Ahmedabad or
Mumbai. He submitted that substantially the same issues are
therefore already pending before that Court.
62. Learned Senior Counsel submitted that the present dispute
does not arise under the Separation Agreement and consequently
cannot be referred to arbitration under the arbitration clause
contained in that agreement. According to him, the Separation
Agreement, the Branding Agreement, the Registered User
Agreement and the Power of Attorney are four separate
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agreements executed for different purposes, by different parties
and containing separate rights and obligations. He submitted that
each agreement provides its own mechanism for resolution of
disputes and therefore one dispute resolution clause cannot
automatically govern disputes arising under another agreement.
63. Learned Senior Counsel pointed out that while the
Separation Agreement contains an arbitration clause, the Branding
Agreement contains only a jurisdiction clause and the Registered
User Agreement confers exclusive jurisdiction upon the Civil
Courts at Ahmedabad. According to him, these differences were
consciously incorporated by the parties and therefore clearly
indicate that they intended different forums for deciding disputes
arising under different agreements. He submitted that this
contractual arrangement must be respected and cannot be altered
by reading all four agreements as though they constitute one
single document.
64. Learned Senior Counsel places strong reliance upon the
decision of the Supreme Court in Duro Felguera, S.A. v.
Gangavaram Port Ltd ., (2017) 9 SCC 729. He submits that the
Supreme Court held that where the parties consciously split their
commercial arrangement into several distinct contracts, each
containing separate arbitration clauses, each agreement has to be
treated independently and disputes arising under one agreement
cannot automatically be referred under the arbitration clause
contained in another agreement.
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65. Mr. Dhond placing reliance upon the decision of the Delhi
High Court in Faith Constructions v. N.W.G.E.L. Church, 2025 SCC
OnLine Del 1746 submitted that, this Court lacks territorial
jurisdiction to entertain the present petition. According to him, the
Court having jurisdiction would be the competent Court at
Ahmedabad, where the substantial cause of action has arisen and
where the respondents carry on business.
66. On this basis, Learned Senior Counsel submitted that the
grievance made by the petitioners arises only because the
Registered User Agreement has been terminated. According to
him, the right to use the "Vadilal" brand itself flows from that
agreement and not from the Separation Agreement. Therefore,
according to him, the present controversy is governed by the
exclusive jurisdiction clause contained in the Registered User
Agreement and not by the arbitration clause contained in the
Separation Agreement. He submitted that for this reason itself the
petition under Section 9 is not maintainable before this Court.
67. Mr. Rustomjee, learned Senior Counsel appearing for
respondent No.17 submitted that respondent No.17, namely,
Vadilal International Private Limited, is the registered proprietor as
well as the beneficial owner of the "Vadilal" brand and the
trademarks connected with it. According to him, even the
petitioners have accepted this position in their own pleadings as
well as in other proceedings. Therefore, according to him, there is
no dispute regarding ownership of the trademark and the only
question is whether the petitioners have any legal authority to
continue using it after termination of the Registered User
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Agreement.
68. Learned Senior Counsel further submitted that the
petitioners are admittedly manufacturing and marketing their
products by prominently displaying the registered "Vadilal"
trademark in the form of a red oval device. According to him, this
trademark is registered in the name of respondent No.17.
Therefore, once the petitioners themselves are using a registered
trademark belonging to respondent No.17, their right to do so can
arise only from the contractual documents executed between the
parties. According to him, the petitioners cannot claim any
independent right outside those agreements.
69. Learned Senior Counsel submitted that the Registered User
Agreement itself clearly recognises the registered "Vadilal"
trademark separately from the other trademarks mentioned in its
Schedule. According to him, a similar distinction is also found in
the recitals of the Power of Attorney. He further submitted that
Clause 5.1 of the Separation Agreement specifically provides that
the Registered User Agreement together with the Power of
Attorney are the documents through which rights relating to the
existing as well as future trademarks and logos are to be granted.
According to him, this clause does not refer to the Branding
Agreement while dealing with trademark rights. He therefore
submitted that the parties themselves intended that the actual
right to use the "Vadilal" trademarks would arise only under the
Registered User Agreement read with the Power of Attorney.
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70. Learned Senior Counsel also relied upon Clauses 2.2 and
4.3(a) of the Separation Agreement. According to him, these
clauses further show that the Registered User Agreement and the
Power of Attorney were intended to be the operative documents
through which rights relating to the trademark were actually
exercised. He submitted that the Separation Agreement merely
recorded the overall family understanding, whereas the detailed
rights relating to the brand were deliberately left to be governed
by the Registered User Agreement and the Power of Attorney.
According to him, this contractual arrangement clearly indicates
that the parties consciously separated the family settlement from
the operational mechanism governing use of the trademarks.
71. Learned Senior Counsel then submitted that the Branding
Agreement itself supports the same interpretation. According to
him, Clause 7.8 of the Branding Agreement specifically provides
that whenever any logo or trademark is subsequently registered in
the name of respondent No.17, the right to use such registered
mark can arise only through execution of another Registered User
Agreement. He submitted that the trademark presently used by the
petitioners is admittedly a registered trademark. Therefore,
according to him, even under the Branding Agreement, use of that
trademark necessarily remains governed by a Registered User
Agreement and not by the Branding Agreement alone.
72. Proceeding further, learned Senior Counsel submitted that
execution of a Registered User Agreement was always intended to
be mandatory whenever any registered trademark belonging to
respondent No.17 was to be used by another party. According to
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him, this explains why both the Registered User Agreement and
the Power of Attorney were drafted in considerable detail and
contain elaborate provisions governing use of the trademark. He
submitted that these documents were not mere formal papers but
were intended to regulate the manner in which the trademark
could be lawfully used.
73. Learned Senior Counsel also submitted that the petitioners
are trying to create a distinction between the expressions “brand
names” and “trademarks”, though the agreements themselves do
not recognise such a difference. According to him, the Branding
Agreement uses both expressions interchangeably. He submitted
that the definition of “brand names” itself includes trademarks and
that Annexure II, though described as brand names, actually
contains the registered trademarks. According to him, the
language employed by the parties shows that they never intended
to maintain the distinction which the petitioners are now
attempting to introduce during the present proceedings.
74. Learned Senior Counsel further submitted that the
petitioners have themselves changed their stand during the course
of hearing. According to him, in the petition they clearly pleaded
that the Registered User Agreement was the operative document
through which they obtained the right to use the "Vadilal" brand
and trademarks. However, during the arguments they started
contending that their rights arise only under the Branding
Agreement. According to him, these two positions cannot stand
together. He submitted that if the petitioners rely upon the
Registered User Agreement, that agreement has already been
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terminated. On the other hand, if they rely only upon the Branding
Agreement, then admittedly no Registered User Agreement exists
authorising use of the present registered trademark.
75. Learned Senior Counsel submitted that even if, for the sake
of argument, it is assumed that the petitioners derive their rights
only from the Branding Agreement, such an argument does not
improve their case. According to him, the Branding Agreement
admittedly contains no arbitration clause. He also pointed out that
the petitioners themselves have accepted this position before the
Ahmedabad Court. Therefore, according to him, whether the
petitioners rely upon the Registered User Agreement or the
Branding Agreement, neither course assists them in maintaining
the present proceedings under Section 9 before this Court.
76. Learned Senior Counsel finally submitted that respondent
No.17 was compelled to take action only because repeated
laboratory testing disclosed serious quality defects in the products
manufactured by the petitioners. According to him, several NABL
accredited laboratories reported high microbiological
contamination, including excessive Aerobic Plate Count, high
Coliform count and presence of E. coli in different products. He
submitted that beginning from September 2025 several notices
were issued calling upon the petitioners to remove these defects
and recall the affected products, but despite sufficient opportunity
the petitioners failed to comply. According to him, the
requirements of Clause 16 of the Registered User Agreement,
therefore, stood fully satisfied, entitling respondent No.17 to
terminate the agreement. He further submitted that the reports
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subsequently relied upon by the petitioners do not displace or
invalidate the findings recorded by the NABL accredited
laboratories. On this basis, he submitted that the termination
dated 26 May 2026 is valid and that the petitioners are not
entitled to any interim protection.
77. Learned Senior Counsel further submitted that if the
interpretation suggested by the petitioners is accepted, namely that
the Registered User Agreement is only a formal document and that
the petitioners possess permanent rights irrespective of its terms,
then several important provisions contained in all the agreements
would become meaningless. According to him, the clauses relating
to quality control, inspection of manufacturing facilities, recall of
defective products, termination in case of breach and other
contractual safeguards would lose all practical effect. He submitted
that the parties could never have intended to execute detailed
agreements containing such conditions if the petitioners were free
to ignore them while continuing to use the "Vadilal" brand.
78. Learned Senior Counsel then referred to the nature of the
Separation Agreement. According to him, this agreement was
entered into only for dividing the family business between the
Ahmedabad Group and the Bombay Group. It distributed the
business activities, manufacturing units and different territories
between the two branches of the family. According to him, while
the Bombay Group retained petitioner No.3 together with certain
territories, the Ahmedabad Group retained Respondent Nos.17 and
18 along with the remaining territories. He submitted that the
Separation Agreement was only an umbrella document recording
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the overall family arrangement and did not itself confer any
operative trademark rights.
79. Learned Senior Counsel submitted that the Separation
Agreement itself recognises that the actual rights relating to the
"Vadilal" brand, trademarks, and logos were to be governed by the
Registered User Agreement and the Power of Attorney. According
to him, the Branding Agreement is not referred to while conferring
those rights. He, therefore, submitted that the parties consciously
intended the Registered User Agreement and the Power of
Attorney to be the operative documents regulating use of the
trademark and not the Separation Agreement itself.
80. Learned Senior Counsel further submitted that the Branding
Agreement also supports this understanding. According to him, the
Branding Agreement was executed mainly between the two family
groups, while respondent No.17 was only a confirming party. He
submitted that its principal object was to define territorial rights
and regulate other business activities relating to agro products and
milk products. According to him, even this agreement proceeds on
the basis that the right to use the "Vadilal" brand is only by way of
licence and that such licence could be granted only through
execution of a Registered User Agreement. He relied upon Clauses
6.1, 6.2 and 7.8 in support of this submission.
81. Learned Senior Counsel also pointed out that although the
Branding Agreement contains a clause regarding jurisdiction, it
does not contain any arbitration clause. According to him, this
position is not disputed even by the petitioners. He further
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submitted that the Branding Agreement itself uses the expressions
“brand names” and “trademarks” interchangeably. Therefore,
according to him, the distinction now sought to be made by the
petitioners between those expressions is contrary to the language
employed by the parties themselves in the agreement.
82. Learned Senior Counsel thereafter submitted that the
Registered User Agreement is the principal and operative
document governing the petitioners' right to use the "Vadilal"
brand. According to him, even the petitioners have repeatedly
described it in their pleadings as the operative agreement. He
submitted that the agreement grants only limited and conditional
rights. Those rights are subject to strict quality control measures,
compliance with statutory requirements, inspection by respondent
No.17 and termination in the event of continuing breach.
According to him, the petitioners cannot claim the benefits of the
agreement while refusing to comply with its conditions.
83. Learned Senior Counsel further submitted that under the
Registered User Agreement no royalty was payable because the
consideration consisted of reciprocal obligations undertaken by
both parties. According to him, maintenance of quality standards,
recall of defective products whenever required and permitting
inspection of manufacturing facilities were essential obligations
accepted by the petitioners in return for royalty free use of the
"Vadilal" brand. Therefore, according to him, the petitioners cannot
now ignore these obligations and yet insist upon continued use of
the trademark.
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84. Learned Senior Counsel also submitted that the Registered
User Agreement specifically provides that upon termination the
petitioners are required to stop using the "Vadilal" brand.
According to him, every requirement prescribed under Clause 16
for termination was strictly complied with. Notices pointing out
the alleged quality defects were issued, sufficient opportunity
extending beyond the contractual cure period was granted and
only thereafter was the agreement terminated. According to him,
the termination was therefore fully in accordance with the
contractual terms agreed by the parties.
85. Learned Senior Counsel denied the allegation that the
laboratory reports were withheld from the petitioners. According
to him, there was no contractual obligation requiring respondent
No.17 to furnish those reports along with every notice. In any
event, he submitted that copies of the reports were subsequently
supplied. He further submitted that the petitioners never accepted
the alleged breaches nor expressed any willingness to remove
them. According to him, they consistently disputed every
allegation and therefore their present complaint regarding supply
of laboratory reports is only an afterthought.
86. Learned Senior Counsel finally submitted that Clause 21 of
the Registered User Agreement specifically confers exclusive
jurisdiction upon the Courts at Ahmedabad in respect of disputes
arising under or connected with that agreement. According to him,
the present controversy directly concerns termination of the
Registered User Agreement and the petitioners' continued use of
the "Vadilal" brand. Therefore, according to him, the disputes are
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governed by the jurisdiction clause contained in that agreement
and not by the arbitration clause found in the Separation
Agreement.
87. Learned Senior Counsel further submitted that the
communication dated 26 May 2026 was not issued suddenly or
without following the agreed procedure. According to him, before
issuing that communication, respondent No.17 had repeatedly
informed the petitioners about the alleged breaches of the
Registered User Agreement through several notices issued from
September 2025 onwards. It is his case that those notices pointed
out repeated failures relating to quality standards and called upon
the petitioners to remove those defects within the contractual
period. Since, according to the respondents, the breaches
continued despite sufficient opportunity, respondent No.17
thereafter terminated the Registered User Agreement, revoked the
Irrevocable Power of Attorney and informed the petitioners that
their rights under the Branding Agreement also came to an end.
Learned Senior Counsel submitted that these actions were taken
only after following the contractual mechanism agreed between
the parties and therefore cannot be described as arbitrary or
illegal.
88. Learned Senior Counsel also disputed the petitioners'
contention that the respondents acted in haste. According to him,
the petitioners themselves invoked arbitration on 10 March 2026,
even before expiry of the contractual cure period and well before
the termination notice dated 26 May 2026 came to be issued. It is
therefore submitted that the petitioners cannot now complain that
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the respondents acted prematurely. According to him, if the
petitioners had actually removed the alleged defects within the
stipulated period, no occasion would have arisen either for
termination or for the present dispute. Learned Senior Counsel
therefore submits that the sequence of events itself shows that the
respondents acted only after giving adequate opportunity under
the agreement.
89. Learned Senior Counsel further submitted that after
termination of the Registered User Agreement, respondent No.17
instituted a civil suit before the City Civil Court at Ahmedabad
seeking an injunction restraining the petitioners from continuing
to use the "Vadilal" trademarks. According to him, the petitioners
have already entered appearance in those proceedings and have
themselves filed an application under Section 8 of the Arbitration
and Conciliation Act requesting reference of the disputes to
arbitration. It is submitted that the Ahmedabad Court is already
considering questions relating to arbitrability, applicability of the
arbitration agreement and jurisdiction. According to him, when
these very issues are pending before another competent Court, this
Court should exercise caution before expressing any contrary
opinion at the interlocutory stage.
90. Learned Senior Counsel thereafter submitted that the present
dispute does not arise under the Separation Agreement and
therefore cannot be brought within the arbitration clause
contained in that agreement. According to him, the Separation
Agreement, the Branding Agreement, the Registered User
Agreement and the Irrevocable Power of Attorney are four separate
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documents executed for different purposes, between different
parties and containing different rights and obligations. He submits
that every agreement was intended to operate independently and
each one contains its own mechanism regarding enforcement and
resolution of disputes. According to him, merely because all the
agreements were executed on the same day does not mean that
every dispute arising under one agreement automatically becomes
a dispute under another agreement.
91. Learned Senior Counsel submitted that this distinction
becomes clearer from the dispute resolution clauses contained in
the agreements themselves. According to him, while the
Separation Agreement contains an arbitration clause, the Branding
Agreement contains only a jurisdiction clause and the Registered
User Agreement specifically confers exclusive jurisdiction upon the
Civil Courts at Ahmedabad. He submits that these different
provisions were consciously agreed by the parties and clearly
indicate that they intended different methods for resolving
disputes arising under different agreements. According to him, if
the petitioners' argument is accepted, these carefully drafted
provisions would lose all meaning and the contractual
arrangement itself would stand rewritten by the Court.
92. Learned Senior Counsel, therefore, argued that the grievance
made by the petitioners has arisen only because the Registered
User Agreement has been terminated. According to him, the right
to use the "Vadilal" brand itself originates only from that
agreement and not from the Separation Agreement. Consequently,
he submits that the present controversy is governed entirely by the
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Registered User Agreement together with its jurisdiction clause
and cannot be referred to arbitration merely because the
Separation Agreement contains an arbitration clause. According to
him, the petition under Section 9 is therefore not maintainable.
93. Learned Senior Counsel further submitted that the
Separation Agreement itself has already been fully implemented
long ago. According to him, the business division contemplated
under that agreement has already taken place and nothing further
remains to be performed under its terms. He submits that the
present controversy concerns only subsequent rights relating to use
of the trademark under the Registered User Agreement. Therefore,
according to him, the present dispute cannot be treated as one
arising from the Separation Agreement or from the family
settlement recorded therein.
94. Learned Senior Counsel also submitted that the petitioners
themselves have admitted in several parts of the petition that
ownership of the "Vadilal" brand and trademarks vests with
respondent No.17. According to him, the petitioners have further
admitted that the Registered User Agreement is the operative
document through which they obtained permission to use the
brand. He submits that these admissions completely support the
respondents' stand that the present controversy is contractual in
nature and is governed only by the Registered User Agreement.
According to him, the petitioners cannot now adopt a different
position merely because the agreement has been terminated.
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95. Learned Senior Counsel lastly submitted that even if, for the
sake of argument, the petitioners rely upon the Branding
Agreement instead of the Registered User Agreement, that also
does not improve their case. According to him, admittedly the
Branding Agreement contains no arbitration clause. Therefore,
according to him, whether the petitioners rely upon the Registered
User Agreement or the Branding Agreement, the result remains the
same. In either situation, according to the respondents, the present
disputes cannot be referred to arbitration under the arbitration
clause contained in the Separation Agreement. Hence, Learned
Senior Counsel submitted that the petition under Section 9
deserves to be dismissed.
96. Learned Senior Counsel further submitted that the
Registered User Agreement cannot be treated as a mere document
executed only to satisfy the requirements of the Trade Marks law.
According to him, the agreement contains several important
commercial conditions which go much beyond any statutory
formality. He pointed out that the agreement lays down territorial
restrictions regarding use of the trademark, provides exemption
from payment of royalty, prescribes detailed quality control
obligations, gives respondent No.17 the right to inspect the
manufacturing facilities, provides for recall of products whenever
necessary, contains provisions for termination in case of continuing
breach and also includes an exclusive jurisdiction clause in favour
of the Courts at Ahmedabad. According to him, none of these
provisions are required merely for registration of a registered user
under the Trade Marks Act. He therefore submitted that the
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Registered User Agreement is a complete commercial contract
governing the rights and obligations of the parties and cannot be
reduced to a mere procedural document.
97. Proceeding further, Learned Senior Counsel submitted that
the parties consciously negotiated and executed the Registered
User Agreement as the principal document regulating the
petitioners' right to use the "Vadilal" brand. According to him,
every important condition relating to use of the trademark has
been incorporated in that agreement. During the course of hearing,
according to Learned Senior Counsel, the petitioners themselves
fairly accepted that they are not claiming ownership of the
"Vadilal" brand but only a right to use it. He therefore submitted
that once the petitioners themselves accept that they are only users
of the trademark, their rights necessarily remain governed by the
contractual terms contained in the Registered User Agreement.
According to him, the present dispute is therefore nothing but a
dispute arising out of that agreement.
98. Without prejudice to his earlier submissions, Learned Senior
Counsel then raised an objection regarding the territorial
jurisdiction of this Court. According to him, even if it is assumed
that the disputes are capable of being referred to arbitration, this
Court would still have no jurisdiction to entertain the present
proceedings. He submitted that Clause 10.1 of the Separation
Agreement provides that arbitration proceedings shall take place in
the territory of the party other than the party which has
necessitated or commenced the arbitration proceedings. According
to him, the expression "necessitated arbitration" should not be
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interpreted to mean the party whose conduct allegedly gave rise to
the dispute because such an exercise would require the Court to
first determine who was at fault. He submitted that such a
question can be decided only after evidence is recorded and not
while deciding an application under Section 9. According to him,
the expression should simply mean the party who actually invoked
or commenced arbitration. Learned Senior Counsel also submitted
that this understanding finds support from the observations made
by the United States Court while dealing with proceedings
between the parties.
99. Learned Senior Counsel further submitted that in the present
case it is an admitted position that the petitioners themselves
invoked arbitration on 10 March 2026, whereas the termination
notice came to be issued only on 26 May 2026. According to him,
the contractual cure period was to expire on 13 March 2026, but
before expiry of that period the petitioners themselves chose to
invoke arbitration. It is, therefore, submitted that the petitioners
themselves commenced and thereby necessitated the arbitration
proceedings. Learned Senior Counsel argued that had the
petitioners removed the alleged defects within the contractual
period, the dispute itself might not have survived. According to
him, even if Clause 10.1 is interpreted in the manner suggested by
the petitioners, the consequence would still be that jurisdiction
would lie before the Courts at Ahmedabad and not before this
Court.
100. Learned Senior Counsel also submitted that all the four
agreements were executed at Ahmedabad. According to him, at the
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relevant time the parties were residing at Ahmedabad, the
documents were executed and notarised there, and the Registered
User Agreement itself confers exclusive jurisdiction upon the
Courts at Ahmedabad. He therefore argued that Ahmedabad has
the closest and most substantial connection with the entire
transaction. According to him, having regard to these surrounding
circumstances, Ahmedabad should also be treated as the
appropriate seat of arbitration as well as the proper forum for
adjudication of all disputes arising between the parties.
101. Learned Senior Counsel further pointed out that the
petitioners have already invoked Section 8 of the Arbitration and
Conciliation Act before the Civil Court at Ahmedabad. According to
him, the questions whether the present disputes are arbitrable and
whether the arbitration clause extends to the connected
agreements are already directly under consideration before that
Court. He therefore submitted that the Ahmedabad Court is the
more appropriate forum to decide those issues. Learned Senior
Counsel also argued that if the interpretation suggested by the
petitioners is accepted, the Registered User Agreement would
become practically meaningless because the petitioners would then
claim an unrestricted and perpetual right to use the "Vadilal" brand
without being bound by the contractual conditions relating to
quality control, inspection, recall of defective products or
termination. According to him, such an interpretation would
defeat the very object for which the Registered User Agreement
was executed and would render several of its provisions
ineffective.
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102. In support of his submissions, Learned Senior Counsel placed
strong reliance upon the decision of the Supreme Court in Duro
Felguera S.A.. According to him, the Supreme Court has held that
where parties consciously divide one commercial arrangement into
separate agreements, each agreement has to be treated
independently and disputes arising under one agreement cannot
automatically be governed by the arbitration clause contained in
another agreement. He submitted that the same principle applies
to the present case because the parties deliberately executed
separate agreements containing separate rights, obligations, and
dispute resolution mechanisms.
103. Learned Senior Counsel also relied upon the decision of the
Delhi High Court in Faith Constructions . According to him, the
principles laid down in that decision support the respondents'
objection regarding territorial jurisdiction. He submitted that the
Court having the closest connection with the dispute and where
the substantial cause of action has arisen should ordinarily exercise
jurisdiction. Since the agreements were executed at Ahmedabad,
respondent No.17 carries on business there and the Registered
User Agreement itself provides for jurisdiction of the Ahmedabad
Courts, learned Senior Counsel submitted that the present petition
ought not to be entertained by this Court and deserves to be
rejected on the ground of lack of territorial jurisdiction.
104. Summarising his submissions, Learned Senior Counsel
contended that the present dispute cannot be treated as one
arising under the Parent or Separation Agreement merely because
all the documents were executed on the same day. According to
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him, each agreement was deliberately drafted for a different
purpose and each created its own separate rights and obligations.
He submitted that the Parent Agreement only recorded the broad
understanding reached between the two branches of the family,
whereas the actual and enforceable rights relating to the use of the
"Vadilal" brand were intentionally placed under the Registered
User Agreement and the Irrevocable Power of Attorney. Therefore,
according to him, the petitioners are wrongly attempting to rely
upon the arbitration clause contained in the Parent Agreement for
resolving disputes which, in substance, arise only under the
Registered User Agreement.
105. Learned Senior Counsel further submitted that the
petitioners are attempting to avoid the legal consequences flowing
from the termination of the Registered User Agreement by
describing the four agreements as one composite family
arrangement. According to him, such an approach is contrary to
the contractual structure consciously adopted by the parties
themselves. He argued that if every dispute relating to the use of
the "Vadilal" brand is treated as a dispute under the Parent
Agreement, the separate contractual provisions contained in the
Registered User Agreement regarding quality control, inspection,
termination and exclusive jurisdiction would become unnecessary
and meaningless. According to him, the Court should interpret all
the agreements in a manner which gives effect to every document
instead of rendering one agreement ineffective by treating it as
merely incidental. In support of his submission he relied on
Maharashtra State Road Development Corporation Ltd. v. Jai
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Laxmi Constructions Engineers and Contractors , 2026 SCC OnLine
Bom 2578, J alan Carbon and Chemicals Limited Versus Passport
Brand Clothing Company Private, 2013 SCC OnLine Cal 22686 ,
M.R. Engineers & Contractors (P) Ltd. v. Som Datt Builders Ltd.,
(2009) 7 SCC 696.
106. Learned Senior Counsel also submitted that the petitioners'
interpretation would practically result in granting them a
perpetual and unconditional right to use the "Vadilal" brand
irrespective of whether they complied with the contractual
obligations relating to quality standards or other conditions
contained in the Registered User Agreement. According to him,
such an interpretation was never intended by the parties while
executing the family settlement documents. He submitted that the
contractual framework clearly contemplated that the right to use
the registered trademarks would remain subject to continuing
supervision, compliance with quality standards and the possibility
of termination in case of persistent breach. Therefore, according to
him, the petitioners cannot avoid those contractual obligations by
placing exclusive reliance upon the Parent Agreement or the
Branding Agreement.
107. Learned Senior Counsel therefore submitted that the validity
of the communication dated 26 May 2026 has to be examined only
within the framework of the Registered User Agreement and not
by treating the entire family settlement as one indivisible
arrangement. According to him, once the Registered User
Agreement has been validly terminated, the petitioners no longer
possess any enforceable right to continue using the "Vadilal" brand.
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He submitted that the present dispute is therefore governed by the
dispute resolution mechanism and jurisdictional provisions
contained in that agreement and not by the arbitration clause
incorporated in the Parent Agreement.
108. On the above basis, Learned Senior Counsel submitted that
the petitioners have failed to establish the existence of any
arbitration agreement governing the present dispute. According to
him, the objections regarding arbitrability, territorial jurisdiction
and maintainability of the petition go to the very root of the
matter. He, therefore, submitted that the petition under Section 9
of the Arbitration and Conciliation Act is not maintainable and
deserves to be dismissed. Alternatively, he submitted that even if
the Court ultimately forms a different prima facie view regarding
arbitrability, no interim protection deserves to be granted because
the petitioners are seeking, in substance, restoration of rights
under a contract which, according to the respondents, already
stands validly terminated in accordance with its express terms.
109. Mr. Andhyarujina, learned Senior Counsel appearing for
respondent No.18 submits that respondent No.18, namely Vadilal
Industries Limited (VIL), has been unnecessarily joined in the
present proceedings. According to him, VIL has no connection with
any of the agreements which are the subject matter of the present
dispute. He submits that the Family Settlement, the Branding
Agreement, the Registered User Agreement and the Power of
Attorney were all executed between other parties, and VIL was
neither a party to those agreements nor had any role in them.
Therefore, according to him, no relief can be claimed against VIL
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and its presence in these proceedings is without any legal basis.
110. Learned Senior Counsel further submits that VIL is a public
limited company incorporated under the Companies Act and a
substantial part of its shareholding is held by public shareholders.
According to him, VIL did not participate in the negotiations
leading to the Family Settlement, did not sign any of the
agreements and never acted upon those agreements. He also
submits that the petitioners have wrongly assumed that several
respondents act through Respondent Nos.17 and 18. According to
him, some of those respondents are not even shareholders of either
respondent No.17 or respondent No.18. He therefore submits that
the petitioners have unnecessarily joined several parties without
properly examining whether they have any connection with the
present dispute. He further submits that after the decision of the
Supreme Court in Cox & Kings (2024) 4 SCC 1 , merely alleging
that someone acts "through or under" another party is by itself no
longer sufficient for joining such person in arbitration proceedings.
111. Learned Senior Counsel submits that the only relationship
which VIL has with the "Vadilal" brand arises from a separate
Registered User Agreement executed with respondent No.17 on 31
July 1996, which was later renewed in the year 2013. According to
him, that agreement is completely different from the agreements
involved in the present proceedings and has no connection with
the Family Settlement of the year 1993. He submits that VIL has its
own Board of Directors, its own management and carries on its
business independently. Therefore, according to him, VIL cannot be
treated as part of the present contractual arrangement merely
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because it uses the "Vadilal" brand under another independent
agreement.
112. Learned Senior Counsel further submits that the only reason
why VIL has been joined in the present petition is because a
Scheme of Merger between respondent No.17 and VIL has been
proposed before the National Company Law Tribunal, Mumbai.
According to him, that scheme is still pending and has not yet been
approved. Therefore, until such approval is granted, no rights,
liabilities or obligations of respondent No.17 stand transferred to
VIL. He points out that even the petitioners themselves have stated
that the merger is only under process and that the rights and
liabilities would vest in VIL only in future. According to him, this
itself shows that there is presently no cause of action against VIL
and that the petition against it is based only upon a future
possibility which may or may not ultimately happen.
113. Learned Senior Counsel also referred to Vadilal Industries
USA Inc., which was originally joined as respondent No.19.
According to him, that company is separately incorporated in the
United States and has its own Board of Directors and independent
management. He submits that the petitioners wrongly described it
as a subsidiary of respondent No.17, whereas it is actually a
subsidiary of VIL. He further submits that any proceedings
commenced by that company before the Courts in the United
States have no connection with VIL. Learned Senior Counsel also
points out that during the hearing the petitioners themselves
deleted respondent No.19 from the proceedings. According to him,
this itself shows that the petitioners have no material to connect
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the acts of respondent No.19 with VIL. He submits that there are
no pleadings alleging fraud, sham transactions or misuse of the
corporate structure so as to justify ignoring the separate legal
identity of VIL.
114. Learned Senior Counsel finally submits that the judgments
relied upon by the petitioners do not assist their case. According to
him, the decision in Girish Mulchand Mehta was rendered on
entirely different facts where the third party had a direct
connection with the dispute. In the present case, VIL has no such
connection, is not a party to any of the relevant agreements and no
relief has been claimed against it. He further submits that the
principle of persons claiming "through or under" another party,
which was applied in that decision, has substantially lost its force
after the decision of the Supreme Court in Cox & Kings .
115. Mr. Andhyarujina also submits that the reliance placed on
ASF Buildtech Pvt. Ltd. is equally misplaced. According to him,
that decision permits joining a non-signatory only where such
party can be shown to be a "veritable party" having direct
involvement in the negotiation, execution, or performance of the
contract. He submits that VIL had absolutely no such involvement
in any of the agreements in question. According to him, mere
association within the same corporate group or the existence of a
proposed merger pending before the NCLT cannot satisfy the legal
requirements laid down by the Supreme Court for joining a non-
signatory party.
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REASONS AND ANALYSIS:
Nature of the Controversy and points for determination:
116. I have considered the submissions made by both the sides. I
have gone through the Memorandum of Agreement, the Branding
Agreement, the Irrevocable Power of Attorney and the Registered
User Agreement. It is not in dispute that all documents came to be
executed on 30 March 1993. I have considered the various
judgments relied upon by the learned Senior Counsel appearing
for both sides regarding family settlements, composite transactions
and the effect where several agreements are executed as part of
one arrangement. At this stage, however, this Court is not expected
to finally decide what rights have been created under these
agreements or which interpretation deserves acceptance. Such
exercise can be undertaken only by the learned Arbitral Tribunal
after considering the entire evidence and after interpreting all the
agreements together. The inquiry before this Court is limited.
Points for determination in the present petition are as under.
117. Whether the Memorandum of Agreement dated 30 March
1993 is the parent agreement governing the entire family
settlement and whether the Branding Agreement, the Irrevocable
Power of Attorney and the Registered User Agreement are merely
implementing documents forming part of one composite family
settlement?
118. Whether the arbitration agreement contained in Clause 10.1
of the Parent Agreement extends to disputes arising out of the
Branding Agreement, the Irrevocable Power of Attorney and the
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Registered User Agreement, or whether each of those agreements
constitutes an independent contract governed by its own dispute
resolution mechanism? Group of Companies doctrine, Cox &
Kings , ASF Buildtech , status of Respondent Nos.17 and 18 and
effect of proposed merger.
Whether the Memorandum of Agreement is the Parent Agreement
Governing the Family Settlement:
119. At this stage, it becomes necessary to examine the Parent
Agreement. Throughout the proceedings, both sides have referred
to this document as the Memorandum of Agreement dated 30
March 1993. This agreement records the broad division of business
between the Bombay Group and the Ahmedabad Group. Clause
2.2 provides for transfer of the Bombay Group's shareholding in
favour of the Ahmedabad Group, while Clause 6.1 deals with
division of the territories in which each group would carry on
business. These provisions are not confined to one trademark or
one licence. They deal with the overall restructuring of the family
business. Therefore, at first sight, the Parent Agreement appears to
record the principal understanding arrived at between the parties.
120. One more important provision is Clause 5.1 of the Parent
Agreement. This clause contemplates execution of documents for
giving effect to the arrangements recorded therein. It refers to the
Branding Agreement, the Irrevocable Power of Attorney and the
Registered User Agreement. The clause recognises that these
documents were to be executed in furtherance of the Parent
Agreement.
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121. The petitioners have placed reliance upon this clause.
According to them, the language indicates that the Parent
Agreement is the umbrella document governing the family
settlement. It is submitted that when the Parent Agreement
requires execution of three agreements for implementing its terms,
those agreements cannot be treated as independent source of
rights divorced from the Parent Agreement.
122. The respondents submit that Clause 5.1 records that three
separate agreements would be executed. According to them, once
those agreements came into existence, each acquired independent
identity. It is submitted that Clause 5.1 nowhere provides that the
Parent Agreement would prevail over the provisions contained in
those agreements.
123. At this stage, the language employed by the parties assumes
importance. The Parent Agreement does not merely refer to future
agreements. It provides for execution of documents as part of the
same restructuring exercise. The sequence of events assumes
significance. All the four agreements were admittedly executed on
the same day. There is nothing available on record to indicate that
after execution of the Parent Agreement the parties entered into
fresh negotiations and executed the remaining agreements. On the
contrary, the material available indicates that all the four
documents formed part of comprehensive restructuring of the
family business undertaken simultaneously. Therefore, on a
reading of the documents placed before this Court, considerable
force appears in the submission advanced on behalf of the
petitioners that the Memorandum of Agreement dated 30 March
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1993 cannot be viewed as an isolated contract. Prima facie, it
appears to be the document recording the family settlement and
restructuring between the two groups.
124. After going through the Parent Agreement, it appears that
this document is wider than the remaining three agreements. It
does not merely deal with permission to use a trademark or
regulate one business activity. It appears to record the overall
understanding reached between the two branches of the Gandhi
family regarding separation of businesses, transfer of shares,
surrender of management rights, future business arrangements
and division of territories. Prima facie, therefore, this agreement
appears to contain the broad arrangement by which the disputes
within the family were intended to come to an end. The remaining
agreements appear to deal with matters arising after this larger
understanding had been reached. Therefore, the Parent Agreement
appears to occupy a different place because it lays down the
overall framework of the settlement while the remaining
agreements appear to deal with parts necessary for implementing
that framework.
125. This prima facie impression also appears to receive support
from the language used in the Parent Agreement. The agreement
does not stop after recording the division of businesses. It also
contemplates execution of additional documents for giving effect
to different parts of the settlement. Matters concerning the
"Vadilal" brand, the manner in which those rights were to be
exercised, execution of documents required under the trade mark
Act and authorisation of representatives were intended to be
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worked out through separate agreements. If the Parent Agreement
contemplated further documents, then it becomes difficult to
accept the respondents' submission that later documents were
disconnected from the Parent Agreement. At the same time, this
circumstance alone also does not establish that those agreements
have no independent existence. It only shows that there appears to
be connection between them which cannot be ignored and which
would require examination during arbitration.
126. The respondents have argued that if the Parent Agreement
alone was intended to govern the relationship, then there was no
necessity for execution of three agreements containing rights and
obligations. This submission certainly deserves consideration. At
the same time, it is possible that where a large family settlement
concerns several companies, businesses and legal formalities, one
main document records the settlement while separate agreements
are executed for implementing different portions of that
settlement. Such drafting is not uncommon in commercial matters.
Therefore, merely because additional agreements came to be
executed, it cannot follow that the Parent Agreement lost its
significance. The real intention of the parties has to be gathered
after reading all the documents together, and that exercise cannot
be finally undertaken at this stage.
Relationship Between the Parent Agreement and the Branding
Agreement, the Irrevocable Power of Attorney and the Registered
User Agreement:
127. The Branding Agreement also appears to fit within this
arrangement. It does not appear to introduce a fresh relationship
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between strangers. Instead, it proceeds on the basis that the
businesses had been divided between the two family groups and
thereafter regulates the future use of the "Vadilal" name, trade
names and business territories by each group. The agreement
proceeds on the footing that certain rights already existed and
thereafter provides the manner in which those rights are to be
exercised. It allocates territories, regulates future business
activities and appears intended to avoid conflict between the two
branches of the family. These circumstances indicate, at least prima
facie, that the Branding Agreement was intended to implement
one aspect of the family settlement rather than replace it.
128. The petitioners have contended that the Bombay Group
surrendered shareholding and management rights in respondent
No.17 in consideration of obtaining permanent territorial rights to
use the "Vadilal" brand. Whether this submission proves correct is a
matter requiring evidence. Nevertheless, if such is found to be the
arrangement, then the right to use the brand may not merely be an
commercial licence but may constitute an important part of the
consideration flowing under the family settlement. This is issue
which prevents this Court from treating the Branding Agreement
as an independent commercial agreement.
129. The Irrevocable Power of Attorney appears to occupy a
supporting position in the arrangement. By itself, it does not
appear to create any commercial relationship. It authorises
representatives to perform acts relating to registration and
trademark rights. Such authority appears to have been granted
because rights recognised elsewhere were required to be exercised.
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Had there been no rights already existing under the family
arrangement, the Power of Attorney would have little significance.
Therefore, when it is read together with the Parent Agreement and
the Branding Agreement, it appears, prima facie, to have been
executed for implementing rights recognised under the settlement.
This observation is only tentative, and the final interpretation must
depend upon the evidence which may come before the Arbitral
Tribunal.
130. The Registered User Agreement stands differently because it
contains provisions regulating the use of the registered
trademarks. It deals with quality control, inspection, maintenance
of standards, statutory compliance, recall of products, duration of
the arrangement, termination, and jurisdiction. These provisions
are detailed. They cannot be ignored because the petitioners
describe the agreement as a standard form. Learned Senior
Counsel appearing for respondent No.17 is justified in submitting
that these clauses impose obligations upon the petitioners and
confer rights upon respondent No.17. Therefore, the Court cannot
reduce these provisions to formalities.
131. However, the existence of these clauses does not conclude
the controversy. There may be a difference between the document
which creates the substantive right and the document which
regulates the manner in which that right is to be exercised.
According to the petitioners, the substantive right is created by the
Parent Agreement and the family settlement while the Registered
User Agreement regulates exercise of that right in accordance with
the Trade Marks Act. According to the respondents, the Registered
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User Agreement is the source from which the petitioners get any
right to use the trademark. This Court cannot finally accept one
and reject the other without detailed examination of all the
agreements and evidence.
132. The respondents have also placed reliance upon the
termination clause contained in the Registered User Agreement.
According to them, if the agreement itself permits termination
upon breaches, it follows that the petitioners' rights are capable of
coming to an end. There is some force in this submission because
ordinarily parties provide termination clauses where they intend
rights to remain conditional. At the same time, the petitioners
submit that this clause cannot be read separately from the family
settlement and that termination of one document cannot
extinguish rights created under the family arrangement. This
shows that the controversy between the parties is larger than mere
interpretation of a clause in the Registered User Agreement.
133. The respondents have further pointed out that agreements
have been signed by different parties. According to them, the
Parent Agreement is between members of the family whereas the
Registered User Agreement is executed between petitioner No.3
and respondent No.17. Likewise, the Branding Agreement and the
Irrevocable Power of Attorney are signed by different parties.
Different parties signing separate agreements may indicate
different relationships. However, this circumstance by itself is not
conclusive. In a family settlement involving several companies and
family members, it may become necessary that different persons
execute different documents depending upon the subject matter
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involved. Therefore, though identity of parties is relevant factor, it
cannot alone determine the nature of the overall arrangement.
134. The conduct of the parties after execution of the agreements
assumes importance. It is not disputed that for more than thirty-
three years both groups continued their respective businesses
under the "Vadilal" name within their territories. During this
period, no material has been shown indicating that respondent
No.17 asserted that the petitioners were merely licensees whose
rights depended only upon the Registered User Agreement. No
material shows that the petitioners openly claimed complete
ownership over the trademarks. The conduct of both sides appears
to indicate that they continued acting upon the arrangement made
in 1993 without interference for decades. Long conduct cannot
rewrite contractual terms, but it certainly becomes important
circumstance while understanding how the parties understood
their relationship.
135. The principles governing family settlements become relevant
while appreciating these documents. The Supreme Court in Kale
has observed that family settlements deserve liberal construction
because such arrangements bring peace within the family, avoid
litigation and preserve harmony. It has also observed that technical
objections should not be allowed to defeat the substance of a
family settlement. These principles do not mean that every
agreement executed between family members becomes composite
settlement. At the same time, they do indicate that while
construing documents executed simultaneously for implementing
family arrangement, the Court should attempt to understand the
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substance of the transaction instead of reading every agreement in
isolation.
Effect of Separate Agreements on the Arbitration Clause.
Applicability of M.R. Engineers, Duro Felguera and Other
Authorities:
136. The objection raised by the respondents is regarding the
arbitration clause itself. According to the respondents, even if it is
accepted that four agreements were executed on the same day and
all of them came into existence while giving effect to one
understanding between the members of the Gandhi family, that
fact is not sufficient for applying the arbitration clause contained
in the Parent Agreement to the other three agreements. Learned
Senior Counsel submits that arbitration is based upon the
agreement between the parties. According to him, the Court
cannot make the arbitration clause wider because such
interpretation may appear convenient. It is submitted that unless
the Branding Agreement, the Irrevocable Power of Attorney and
the Registered User Agreement contain an arbitration clause or
show that they have adopted Clause 10.1 of the Parent Agreement,
disputes arising under those documents cannot be referred to
arbitration merely because the agreements were executed on the
same date or because they have connection with each other.
According to the respondents, the Court has to look at what the
parties have actually agreed and not what may appear to be
convenient after disputes have arisen.
137. This submission proceeds upon the principles contained in
Section 7 of the Arbitration and Conciliation Act. The Act
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recognises arbitration where the parties have agreed that their
disputes shall be decided by an Arbitral Tribunal. Where
incorporation by reference is relied upon under Section 7(5), the
intention to bring the arbitration clause from one agreement into
another agreement must appear from the agreement. Such
intention cannot be presumed because two agreements relate to
the same business transaction or because one agreement refers to
another for some purpose. According to the respondents, unless
the conditions contemplated by Section 7(5) are satisfied, the
arbitration clause contained in one agreement cannot travel into
another agreement by implication. The language must indicate
that the parties intended such incorporation. If that intention is not
visible from the documents, the Court cannot supply it.
138. Learned Senior Counsel appearing for respondent No.17 has
placed reliance upon the judgment of the Supreme Court in M.R.
Engineers & Contractors (P) Ltd. According to him, the legal
position stands settled that a mere reference to another agreement
is not enough for importing the arbitration clause. The Supreme
Court has explained that where parties refer to another document
for the purpose of execution or carrying out contract, only those
provisions relating to performance become applicable. The
arbitration clause contained in that document does not become
part of the later agreement unless there is an indication showing
that the parties also intended to adopt the arbitration clause.
Learned Senior Counsel therefore submits that this principle
applies in the present case because neither the Branding
Agreement nor the Registered User Agreement provides that
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disputes arising under those agreements shall be governed by
Clause 10.1 of the Parent Agreement. According to him, when the
agreements are silent, the Court cannot import the arbitration
clause merely because the documents are connected.
139. There can not be dispute about the legal principles explained
in M.R. Engineers . The Supreme Court has explained the
circumstances in which an arbitration clause contained in one
document may be treated as becoming part of another agreement.
It has been held that there must first be a reference to the
document containing the arbitration clause. Secondly, such
reference must disclose an intention that the arbitration clause
should become applicable to the subsequent contract. The
Supreme Court has observed that where one agreement states
that performance shall take place according to another agreement,
those provisions relating to performance become applicable and
not the arbitration clause. These principles have become well
settled. Therefore, the petitioners cannot succeed merely by
showing that one agreement refers to another agreement or
because all the four agreements were executed simultaneously.
140. The respondents have relied upon the judgment of the
Supreme Court in Duro Felguera . Learned Senior Counsel submits
that in that case several agreements had been executed as part of
one project. Even then, the Supreme Court held that every
agreement retained its separate identity because the parties had
chosen to execute different contracts and provide different
arbitration clauses for each of them. The Supreme Court observed
that merely because several agreements were connected with one
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object, it did not mean that they merged into one contract.
Learned Senior Counsel submits that the same principle applies
here. According to him, the parties executed four different
agreements. They created different rights and obligations. They
omitted arbitration clauses from some agreements. Therefore,
according to the respondents, the Court cannot ignore that
arrangement and substitute an intention which the parties never
chose.
141. The judgment in Duro Felguera lays down an important
principle. The Supreme Court observed that where parties execute
separate agreements dealing with separate subjects and provide
different methods for resolution of disputes, the Court should
respect that arrangement. The Supreme Court observed that a
mere reference to another agreement for execution purposes does
not result in the agreements becoming one contract or losing their
separate identity. The intention of the parties remains the
important consideration. These observations deserve due weight
while examining the present dispute.
142. However, while appreciating the applicability of M.R.
Engineers and Duro Felguera , it is necessary to keep in mind the
background in which those principles were laid down. Both those
judgments arose out of commercial contracts entered into between
parties dealing with each other for business purposes. Prima facie,
the present matter appears to arise in a different background.
Here, all the documents were executed while giving effect to a
family arrangement intended to divide the businesses of the family
between two branches. The Parent Agreement appears to record
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the larger family settlement and contemplates execution of
documents for carrying out parts of that settlement. Therefore, the
question before this Court is not confined only to incorporation by
reference under Section 7(5). In my prima facie view, issue
requires examination and cannot be answered by applying the
principles governing commercial contracts.
143. The respondents have argued that this distinction makes no
difference. According to them, Section 7 of the Arbitration and
Conciliation Act does not draw any distinction between
commercial contracts and family settlements. Learned Senior
Counsel submits that if the parties intended arbitration in respect
of every agreement, nothing prevented them from inserting
arbitration clauses in all the agreements. According to him, the
absence of arbitration clauses in the Branding Agreement and the
Registered User Agreement indicates that the parties intended that
disputes arising under those documents should not be governed by
Clause 10.1 of the Parent Agreement. Therefore, the Court should
respect the language and should not presume something which the
parties have not stated.
144. This submission also deserves consideration. The absence of
an arbitration clause in an agreement is an important
circumstance. Equally important is the fact that the Registered
User Agreement contains its own jurisdiction clause conferring
jurisdiction upon the Courts at Ahmedabad. Prima facie, these
provisions indicate that the subsequent agreements possess some
independent character and cannot be treated as documents having
no existence apart from the Parent Agreement. The Court cannot
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ignore these clauses because the petitioners describe all the four
documents as one family arrangement. Every clause agreed
between the parties has to be given importance while
understanding their intention. At the same time, these
circumstances do not conclude the controversy. The Court is
required to examine the true nature of the dispute. If the
controversy had been confined to interpretation of one clause
contained in the Registered User Agreement, the submission
advanced by the respondents would carry force. However, the
petitioners do not merely challenge termination of the Registered
User Agreement. Their case proceeds on a broader basis. According
to them, by issuing the communication dated 26 May 2026,
respondent No.17 has not only terminated the Registered User
Agreement but has also revoked the Irrevocable Power of Attorney
and has denied the permanent rights which were created under
the Parent Agreement and implemented through the Branding
Agreement. According to the petitioners the present dispute is not
confined to one agreement but concerns the family settlement and
the rights flowing therefrom.
145. After considering the principles relating to incorporation of
an arbitration agreement, it becomes necessary to examine what is
the true nature of the four agreements executed on 30 March
1993. This exercise becomes necessary because the petitioners do
not rest their entire case only upon Section 7(5) of the Act.
According to them, all the four documents cannot be read in
isolation because they together record one family settlement. It is
their case that the arbitration clause contained in the Parent
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Agreement governs the whole arrangement and not merely one
document in isolation. The respondents have seriously disputed
this position. According to them, every agreement has its own
separate existence and every document must be understood
according to its own language without borrowing terms from
another agreement. Therefore, the real dispute before this Court is
not only whether one arbitration clause has been incorporated into
another agreement. The larger controversy appears to be regarding
the true character of the entire transaction and whether all the
four documents together form one integrated family arrangement
or whether they create four separate legal relationships having
independent existence.
Prima Facie Nature of the Four Agreements as One Composite
Family Settlement:
146. Upon an overall consideration of the Parent Agreement, the
Branding Agreement, the Irrevocable Power of Attorney, the
Registered User Agreement, the surrounding circumstances, the
admitted conduct of the parties extending over more than thirty-
three years and the nature of the family settlement pleaded by the
petitioners, I am prima facie satisfied that the petitioners have
raised a substantial case that all the four agreements constitute
interconnected parts of one larger family arrangement. Whether
this contention ultimately succeeds is entirely a matter for the
learned Arbitral Tribunal after complete appreciation of the
evidence. At this interlocutory stage, however, the petitioners' case
cannot be rejected merely by treating every agreement as wholly
independent and completely disconnected from the others. The
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true relationship between these four agreements itself appears to
be one of the principal disputes requiring determination in the
arbitral proceedings.
147. Prima facie, while considering the present petition, I am of
the view that the petitioners have been able to show a prima facie
case that the Memorandum of Agreement dated 30 March 1993
appears to be the main document recording the Family Settlement
between the parties. It also appears that the Branding Agreement,
the Irrevocable Power of Attorney and the Registered User
Agreement did not come into existence independently but appear
to have been executed for giving effect to different parts of that
larger family arrangement. If this prima facie view is kept in mind,
it may not be proper to proceed as if all the four agreements are
unconnected contracts for applying the principles explained in
M.R. Engineers and Duro Felguera. The material placed before this
Court indicates bona fide case that these documents may have
been intended to work together as different instruments forming
part of one Family Settlement. It is true that the respondents have
raised serious objections relying upon the absence of arbitration
clauses in some of the agreements and upon the independent
provisions contained therein. This conclusion is sufficient for
deciding the present petition under Section 9. It cannot be treated
as a final declaration of the rights of the parties.
148. Accordingly, Issue No.1 is answered, only for the limited
purpose of the present proceedings under Section 9 of the
Arbitration and Conciliation Act. These findings shall not bind the
Arbitral Tribunal while deciding the disputes upon appreciation of
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the evidence.
Effect of Non Signatories. Respondent Nos.17 and 18. Group of
Companies Doctrine and Proposed Merger:
149. One more important objection has been raised by the
respondents. According to them, even if the Parent Agreement
contains an arbitration clause, Respondent Nos.17 and 18 have
not signed that agreement. Therefore, they cannot be forced to go
before the Arbitral Tribunal. According to petitioners, the
respondents are trying to divide overall arrangement into separate
parts. They submit that respondent No.17 cannot be treated as a
stranger who has no concern with the family settlement. It is
pointed out that respondent No.17 is admittedly a confirming
party to the Branding Agreement. It has itself executed the
Registered User Agreement. It has also executed the Irrevocable
Power of Attorney and for more than thirty-three years it has acted
upon the arrangement which came into existence because of the
family settlement. The petitioners submit that it is respondent
No.17 has issued the communication dated 26 May 2026 by which
it has purported to terminate the Registered User Agreement,
revoke the Irrevocable Power of Attorney and deny the petitioners
the right to continue using the "Vadilal" brand. According to them,
after acting upon the arrangement for a long period, respondent
No.17 cannot say that it has nothing to do with the Parent
Agreement or the arbitration clause.
150. So far as respondent No.18 is concerned, the petitioners
submit that it cannot be treated as a outsider. According to them,
the respondents are seeking to transfer rights relating to the
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"Vadilal" brand in favour of respondent No.18 under the proposed
scheme pending before the National Company Law Tribunal. It is
also alleged that respondent No.18 participated in obtaining
laboratory reports and also took part in different steps which
resulted in issuance of the communication dated 26 May 2026.
According to the petitioners, therefore, respondent No.18 has
actively participated in the acts from which the present dispute has
arisen. The respondents have disputed each of these allegations.
Whether those allegations are proved or not will depend upon the
evidence which may be led before the Arbitral Tribunal. However,
at this stage the Court cannot proceed on the footing that
respondent No.18 has no connection with the controversy.
151. While examining these rival submissions, it also becomes
necessary to notice the development of law relating to non
signatories. It is true that arbitration is based upon consent
between parties. At the same time, commercial transactions are
often carried out through several companies belonging to business
group. Family settlements may involve separate companies and
family members, though every one of them may not sign each
document. Because of such situations, the law has recognised that
in certain cases even a person or company who has not signed the
agreement may still be referred to arbitration. At the same time,
this principle cannot be applied in every case. Merely because
different companies belong to one group or are connected does not
make every company a party to the arbitration agreement.
152. The Constitution Bench of the Supreme Court in Cox & Kings
has examined this question in detail. The Supreme Court has made
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it clear that the Group of Companies doctrine does not create
arbitration merely by imagination. A company does not become
bound only because it belongs to the same group. The real enquiry
is whether from the agreements, the conduct of parties,
surrounding circumstances, subject matter, participation in
negotiation, implementation, and termination of the transaction
and the overall arrangement, it can be gathered that even the non-
signatory intended to be bound by the arbitration agreement.
Therefore, while applying this doctrine, consent continues to
remain the foundation. The only difference is that such consent
may sometimes be gathered from the conduct of the parties and
the overall transaction and not only from the signatures on the
agreement.
153. The respondents have submitted that the petitioners are
trying to invoke the Group of Companies doctrine because
Respondent Nos.17 and 18 belong to the same group. At this stage,
I am unable to accept this submission. The petitioners have not
relied only upon the relationship between parties. They have
pointed out surrounding circumstances. According to them,
respondent No.17 has executed some of the agreements forming
part of the overall arrangement. It has acted upon those
agreements for more than three decades. It has issued the
impugned communication terminating the Registered User
Agreement and revoking the Irrevocable Power of Attorney.
According to the petitioners respondent No.17 is not merely
connected with the transaction but has played a main role in
implementing the family settlement and while taking the steps
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which have taken away their rights. These circumstances cannot be
ignored while examining the objection regarding non signatories.
154. Prima facie, therefore, I am unable to hold respondent No.17
is a stranger to the overall transaction. The petitioners have prima
facie succeeded in establishing that respondent No.17 accepted
and acted upon the entire arrangement including the arbitration
clause. The material available before this Court raises prima facie
case in favour of petitioners, which may require final consideration
by the learned Arbitral Tribunal after appreciation of the evidence.
155. So far as respondent No.18 is concerned, the position
appears to stand on a different footing. The petitioners rely upon
the proposed merger, the participation in obtaining laboratory
reports and the role said to have been played by respondent No.18
before issuance of the communication dated 26 May 2026. All
these allegations have been disputed by the respondents. Whether
respondent No.18 has actually undertaken obligations arising
under the family settlement or whether its role is incidental will
have to be decided after appreciation of evidence. Nevertheless,
considering the material placed before the Court, it cannot be said
that respondent No.18 is unconnected with the dispute. The exact
nature and extent of its involvement will necessarily require
detailed examination before the learned Arbitral Tribunal.
156. The petitioners have relied upon the judgment in ASF
Buildtech . According to them, that decision recognises that where
several agreements together form one transaction and separate
adjudication may result in inconsistent findings, the Court may
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refer disputes arising under all such agreements to arbitration even
though every agreement may not contain an arbitration clause.
According to the petitioners, the basic principle behind that
judgment is that the Court should ascertain the intention of the
parties after looking at the transaction as a whole instead of
breaking it into different pieces. Learned Senior Counsel submits
that this principle supports the petitioners because the present
dispute cannot be decided by treating each agreement as separate
without examining the family settlement.
157. The respondents have argued that the judgment in ASF
Buildtech cannot override the principles explained in M.R.
Engineers and Duro Felguera . There can be no disagreement with
this submission. In my opinion, all these judgments operate in
their respective fields. M.R. Engineers explains the law regarding
incorporation by reference. Duro Felguera lays emphasis on the
independent existence of contracts. Cox & Kings explains the
circumstances in which non signatories may be referred to
arbitration. ASF Buildtech deals with transactions involving several
agreements. Their application depends upon the nature of
arrangement and surrounding circumstances of each case.
158. The proposed merger requires consideration because
submissions have been made on this aspect. According to the
petitioners, if rights relating to the "Vadilal" brand are transferred
in favour of respondent No.18 under the proposed scheme, the
rights claimed by the petitioners under the family settlement may
suffer unless respondent No.18 remains bound by the obligations
arising from that settlement. The respondents, however, submit
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that a merger approved under law cannot enlarge the scope of an
arbitration agreement.
159. Prima facie, I find substance in the respondents' submission
that a scheme of merger neither creates rights nor destroys existing
obligations. Ordinarily, the successor company steps into the
position of its predecessor subject to the terms of the sanctioned
scheme. Therefore, if respondent No.17 is found bound by
obligations arising from the family settlement, those obligations
may not disappear only because there has been restructuring. On
the other hand, if respondent No.17 is found not to be bound by
the arbitration agreement, the proposed merger cannot create such
obligation. Therefore, the proposed merger does not answer the
question of arbitrability. It explains why the petitioners have
considered it necessary to implead respondent No.18.
160. I am, prima facie, satisfied that interim protection under
Section 9 can also be granted against respondent No.18 because
the prima facie material placed before this Court indicates that
respondent No.18 claims rights through respondent No.17 under
the proposed merger and that the rights sought to be transferred
are themselves the subject matter of the present dispute. If, during
pendency of the arbitral proceedings, respondent No.18 is
permitted to deal with, transfer, exercise or assert those disputed
rights without any restraint, there is a reasonable possibility that
the subject matter of the arbitration may undergo change. Such a
situation may prejudice the rights claimed by the petitioners.
Therefore, for preserving the existing position until the learned
Arbitral Tribunal examines the disputes, respondent No.18 also
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deserves to be restrained by an interim order.
161. The respondents have also pointed out that proceedings are
pending before the Ahmedabad Court where an application under
Section 8 of the Arbitration and Conciliation Act has been filed.
According to them, the issue regarding arbitrability is under
consideration before that Court. This circumstance deserves notice.
However, mere pendency of proceedings before another Court
does not prevent this Court, while exercising jurisdiction under
Section 9, from forming a prima facie opinion regarding existence
of an arbitration agreement for the limited purpose of deciding
whether interim protection deserves to be granted. Therefore,
whatever observations are recorded herein are confined to the
present proceedings and shall not prejudice the decision which
may be taken by any other competent Court or by the Arbitral
Tribunal.
162. Upon an overall consideration of Clause 10.1 of the Parent
Agreement, the four agreements executed on 30 March 1993, the
nature of the family settlement, the conduct of the parties
extending over more than three decades, the principles explained
in Cox & Kings regarding non signatories, the observations
contained in ASF Buildtech relating to transactions, the objections
based upon M.R. Engineers and Duro Felguera and the role
attributed to Respondent Nos.17 and 18, I am prima facie satisfied
that the petitioners have made out a prima facie case that the
arbitration agreement contained in the Parent Agreement is
capable of extending to the present disputes. The objections raised
by the respondents cannot be accepted as concluding the
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controversy.
163. Accordingly, for the limited purpose of deciding the present
petition under Section 9 of the Arbitration and Conciliation Act, I
hold, prima facie, that the petitioners have established an arguable
case that the arbitration agreement contained in Clause 10.1 of the
Parent Agreement is capable of governing disputes arising out of
the Branding Agreement, the Irrevocable Power of Attorney and
the Registered User Agreement, these documents being capable of
constituting different parts of one composite family settlement. I
am also prima facie of the opinion that the objections regarding
Respondent Nos.17 and 18, applicability of the Group of
Companies doctrine and the effect of the proposed merger raise
substantial questions which require detailed adjudication before
the learned Arbitral Tribunal and cannot be finally determined in
proceedings under Section 9. These findings are only tentative,
recorded for deciding the present petition, and they shall not bind
the learned Arbitral Tribunal while independently deciding all
questions relating to jurisdiction, arbitrability, interpretation of the
agreements and the ultimate rights of the parties.
164. Prima facie, I am satisfied that Respondent Nos.1 to 16
cannot be treated as persons having no concern at all with the
present dispute. The petitioners have taken a case that Respondent
Nos.1 to 16 represent the Ahmedabad Group and that the rights
claimed by that group under the Family Settlement are being
exercised through respondent No.17. Whether this case is found
correct or not can be decided only after detailed examination of
the agreements and the evidence which may come before the
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Arbitral Tribunal. However, on the material placed before this
Court, it cannot be said that the petitioners' contention is without
foundation. Prima facie, they have been able to show a prima facie
case that respondent No.17 has been acting in relation to the
disputed rights on behalf of the Ahmedabad Group. Therefore, at
this stage, it may not be proper to separate Respondent Nos.1 to
16 from the controversy as if they have no connection with the
rights which are under dispute.
165. If interim protection is granted against respondent No.17
and Respondent Nos.1 to 16 are left free to deal with, transfer,
create third party rights or otherwise assert the same disputed
rights through different arrangement, the protection granted by
this Court may not remain effective. The purpose of granting relief
under Section 9 is to keep the existing position protected until the
disputes are decided in arbitration. That purpose may not be
achieved if the persons who are alleged to represent one branch of
the Family Settlement remain outside the operation of the interim
order. In such a situation, there may remain a possibility that the
subject matter of the arbitration may undergo change before the
learned Arbitral Tribunal gets an opportunity to examine the entire
dispute. Accordingly, for the limited purpose of deciding the
present petition under Section 9, I am prima facie of the opinion
that the interim injunction should also operate against respondent
Nos.1 to 16. The interim order is being passed for preserving the
present position and to ensure that the disputed rights are not
changed, transferred or otherwise affected before the Arbitral
Tribunal examines the entire controversy.
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166. At the same time, this Court is conscious that respondent
Nos.1, 2, 10, 11, 14 and 16 are no longer alive. Naturally, no
operative relief can either be granted against or enforced against
deceased persons.
Interpretation of Clause 10.1 of the Memorandum of Agreement
and Territorial Jurisdiction:
167. Learned Senior Counsel appearing for respondent No.17 has
also raised an objection regarding the territorial jurisdiction of this
Court. According to him, even if, for the present, it is assumed that
the disputes can go to arbitration, this Court still has no
jurisdiction to entertain the present petition. He submits that
Clause 10.1 of the Memorandum of Agreement says that the
arbitration proceedings shall be subject to the jurisdiction of the
territory of the party other than the party "who has necessitated
the arbitration proceedings". According to the respondents, these
words should not be understood to mean the party whose acts are
alleged to have given rise to the dispute. It is submitted that the
expression only means the party who actually starts or invokes the
arbitration proceedings. On this basis, it is argued that this Court
has no territorial jurisdiction to entertain the present proceedings.
168. For consideration above submission it is necessary to set out
Clause 10.1 which reads as under:
“Clause10.1- This MOU and the other Understandings and
the agreements that may be executed on the basis of these
understandings are subject to arbitration as per the Indian
Arbitration Act, 1940. In the event of any dispute arising
between the parties or in relation to the construction or
interpretation of the agreement or such other Memorandum
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of Understandings, the same shall be referred to a sole
arbitrator, if parties agree upon such sole Arbitrator, failing
which each party may depute/ nominate their arbitrator who
in turn will appoint an Umpire. The arbitration proceedings
are subject to the jurisdiction of the Territory of the party
other than who has necessitated the Arbitration
Proceedings.”
169. Prima facie, I am not inclined to accept this submission. In
my opinion, the words used in Clause 10.1 cannot, at this stage, be
read in a manner which makes the clause difficult to work. If the
interpretation suggested by the respondents is accepted, the words
"who has necessitated the arbitration proceedings" would become
the same as saying the party who files or starts the arbitration
proceedings. However, the parties have not used expressions such
as "the party commencing arbitration" or "the party invoking
arbitration". They have used different words, namely, "the party
who has necessitated the arbitration proceedings". Prima facie,
these words appear to have been used with some purpose and
cannot be treated as unnecessary. They seem to indicate the party
whose acts or conduct are alleged to have made it necessary for
the other side to approach arbitration. At this stage, it may not be
proper to ignore the language chosen by the parties and substitute
different words which do not find place in the agreement.
170. It is true that whether the allegations made by the
petitioners are proved or not can only be decided after detailed
appreciation of the evidence by the Arbitral Tribunal. However,
that circumstance does not prevent this Court from forming a
prima facie opinion while considering its jurisdiction under Section
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9. Such a prima facie exercise is undertaken only for deciding
whether interim protection deserves consideration and does not
amount to finally deciding the rights or liabilities of either side.
171. If the interpretation suggested by the respondents is
accepted, another difficulty also appears to arise. The question of
territorial jurisdiction may remain uncertain until the arbitral
proceedings are completed, and the disputes are decided. In that
event, the Court may first have to wait for a final adjudication
before deciding whether it had jurisdiction to entertain the petition
at all. Prima facie, such an interpretation would make the
jurisdiction clause difficult to implement, particularly in
proceedings under Section 9 where urgent interim protection is
sought before commencement of arbitration. It does not appear
that the parties intended to adopt a clause which would become
workable only after the entire dispute is finally concluded.
172. In the present case, the petitioners have asserted that the
communication dated 26 May 2026 issued by respondent No.17,
by which the Registered User Agreement was terminated, the
Irrevocable Power of Attorney was revoked and the petitioners'
continued right to use the "Vadilal" brand was denied, has given
rise to the present disputes and has made it necessary for them to
invoke arbitration. Whether these allegations are established or
not is a matter which will be examined by the Arbitral Tribunal.
However, for the limited purpose of deciding the present petition,
these pleadings furnish sufficient prima facie material for
considering the question of territorial jurisdiction.
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173. Proceeding on this limited prima facie basis, and accepting
the petitioners' case only for deciding the present application,
respondent No.17 would, prima facie, be the party whose acts are
alleged to have necessitated the arbitration proceedings.
Consequently, under Clause 10.1, the arbitration proceedings
would, prima facie, be subject to the jurisdiction of the territory of
the other party, namely the petitioners, who admittedly carry on
business from Mumbai. Prima facie, therefore, this Court possesses
territorial jurisdiction to entertain and decide the present petition
under Section 9. These observations are only tentative and are
confined to the present proceedings. They shall not prevent the
learned Arbitral Tribunal from independently interpreting Clause
10.1 or deciding any issue relating to territorial jurisdiction after
examination of the documents, the circumstances, and the
evidence which may be led by the parties.
Effect of Termination of the Registered User Agreement During
Pendency of the Disputes:
174. Learned Senior Counsel appearing for respondent No.17 has
submitted that after issuance of the termination notice dated 26
May 2026, the Registered User Agreement has come to an end.
According to him, once the agreement stands terminated, there is
no relationship between the parties. It is therefore submitted that
any order permitting the petitioners to continue using the "Vadilal"
trademark would amount to restoring a relationship which has
been extinguished. Learned Senior Counsel submits that such an
order amounts to granting a mandatory injunction. According to
him, a mandatory injunction at an interlocutory stage is granted
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only where an exceptionally strong prima facie case is made out.
He therefore submits that the petitioners must satisfy a much
higher standard than that ordinarily applicable under Section 9. It
is submitted that if the Court grants the relief sought, the Court
would in substance compel respondent No.17 to continue
recognising rights which already stand extinguished. Learned
Senior Counsel therefore submits that the petition deserves to be
rejected on this ground alone.
175. The answer to the respondents' objection depends upon the
true nature of the rights asserted by the petitioners. The Court
cannot determine the character of the relief merely by looking at
the form of the termination notice. The Court must also examine
the source from which the petitioners claim their rights. If the
petitioners' case is that their rights arise solely under the
Registered User Agreement, then termination of that agreement
would assume importance. On the other hand, if the petitioners
assert that their rights originate independently under family
settlement and that the Registered User Agreement gives effect to
those pre-existing rights, then the consequences become different.
Therefore, before characterising the present relief as restoration of
a terminated contract, it becomes necessary to identify the
foundation upon which the petitioners base their claim.
176. If the petitioners claimed continuation of the Registered User
Agreement as licence, the respondents' submission would carry
force. In such a situation, once the licence stood terminated in
accordance with its contractual terms, the Court would be slow in
directing restoration of the contractual relationship. Such an order
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would revive a contract which the parties had agreed could be
terminated upon occurrence of specified events. Courts have held
that where a party seeks continuation of a contractual licence after
termination, the relief partakes the character of a mandatory
injunction and therefore requires a stronger prima facie case than
that applicable to an prohibitory injunction. In those
circumstances, the Court would hesitate to compel one contracting
party to continue recognising rights which have come to an end.
Thus, if the present case were confined only to the Registered User
Agreement, the respondents' contention would deserve acceptance.
177. The present proceedings, however, do not proceed upon such
a foundation. The petitioners do not merely contend that the
Registered User Agreement should continue notwithstanding its
termination. Their submission has been that the Registered User
Agreement is only one amongst four documents executed on 30
March 1993 for implementing one family settlement. According to
them, the Parent Agreement, the Branding Agreement, the
Irrevocable Power of Attorney and the Registered User Agreement
together constitute one composite arrangement. It is their case that
the Parent Agreement contemplated execution of the remaining
three documents in order to implement the family settlement.
They further submit that ownership rights, shareholding, and
management control in respondent No.17 were surrendered by the
Bombay Group in consideration of obtaining exclusive territorial
rights. According to them, those rights were created by the family
settlement and not by the Registered User Agreement. The
Registered User Agreement provided the mechanism through
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which those existing rights could be exercised in accordance with
the requirements of the Trade Marks Act. Thus the source of their
rights lies beyond the Registered User Agreement.
178. Proceeding on that basis, the petitioners contend that the
termination is ineffective because the Registered User Agreement
cannot be isolated from the Parent Agreement, the Branding
Agreement and the Irrevocable Power of Attorney. According to
them, all four documents were executed simultaneously. They refer
to one another. They implement different parts of the same family
arrangement. They further submit that if the Registered User
Agreement alone is treated as the source of rights, the
consideration flowing under the Parent Agreement would fail
because the Bombay Group would have surrendered ownership
and management rights while remaining exposed to extinction of
the benefit received under the settlement. According to them, such
an interpretation would destroy the balance created between the
two branches of the family in 1993. The petitioners therefore
submit that termination of one document cannot extinguish rights
which are claimed to have been created under the family
settlement.
179. Thus, the Court is not asked to revive a terminated licence.
The Court is called upon to preserve disputed rights which arise
under the family settlement and which merely came to be
operationalised through the Registered User Agreement and the
Irrevocable Power of Attorney. The distinction is significant. If the
petitioners establish that their rights do not originate solely under
the Registered User Agreement, then continuation of those rights
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cannot be equated with revival of a terminated licence. In such a
situation, the interim order would not create fresh rights. It would
preserve an existing state of affairs. Therefore, the real question
before this Court is not whether the Registered User Agreement
has been terminated. The more fundamental question is whether
termination of that document alone determines the existence of
the rights asserted under the family settlement.
180. At this stage prima facie the existence of this controversy
distinguishes the present proceedings from cases involving an
commercial licence. In normal licence dispute, the source of rights
is undisputed and the controversy concerns the validity of
termination. In the present case, prima facie it appears that origin
of the petitioners' rights flow from a composite family settlement
implemented through four interconnected documents. Until
controversy is finally resolved, it would be inappropriate to
proceed upon the assumption that termination of the Registered
User Agreement alone concludes every right asserted by the
petitioners. It is because of this dispute regarding the source of the
rights claimed that the Court considers it appropriate to preserve
the existing position, subject to appropriate safeguards, until the
learned Arbitral Tribunal finally determines the effect of the 1993
Family Settlement Agreements. This conclusion is purely prima
facie and shall not be construed as expressing any final opinion on
the legality of the termination.
Whether the petitioners have made out a case for interim
protection under Section 9:
181. I have already considered the rival submissions while dealing
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with the nature of the family settlement, the question whether all
the agreements form one composite transaction, the effect of
incorporation of the arbitration clause and the objection raised
regarding the parties to the arbitration. After having considered
those issues, the question which requires examination is whether
the petitioners have made out a case for grant of interim
protection under Section 9 of the Arbitration and Conciliation Act,
1996. In other words, even if the petitioners are able to show that
there exists an arbitration agreement and that disputes have arisen
between the parties, it still remains necessary to examine whether
the settled requirements for grant of interim relief are satisfied.
The Court is also required to see whether the nature of the dispute,
the surrounding circumstances and the material placed on record
justify exercise of the discretionary powers under Section 9.
Therefore, before considering the reliefs sought by the petitioners,
it becomes necessary to examine whether the petitioners have
established a prima facie case, whether refusal of protection would
result in prejudice incapable of being compensated and whether,
on an overall assessment of the claims, the balance of convenience
lies in favour of granting interim protection till the disputes are
decided in arbitration.
Prima facie case:
182. While considering Issue Nos.1 and 2, this Court has
discussed the nature of the documents executed on 30 March 1993
and the rival submissions. The material placed on record clearly
discloses questions regarding the character of these four
documents. The Parent Agreement contemplates execution of the
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Branding Agreement, the Irrevocable Power of Attorney and the
Registered User Agreement for implementation of the family
settlement. Prima facie, therefore, these documents do not appear
to have come into existence independently of each other. Whether
they merely supplement each other or whether each of them
creates separate rights is one of the principal controversies
between the parties. The petitioners contend that the Registered
User Agreement only operationalises rights which had already
crystallised under the Parent Agreement. The respondents contend
that it independently creates those rights and therefore
independently governs their continuation and termination. The
answer to this controversy necessarily depends upon detailed
examination of the contractual language, surrounding
circumstances, conduct of the parties over the last three decades
and evidence regarding the commercial intention underlying the
family settlement. Such an exercise cannot appropriately be
undertaken in proceedings under Section 9. At the present stage it
is sufficient to observe that these questions are substantial and
cannot be brushed aside. They require detailed adjudication before
the learned Arbitral Tribunal.
183. At this stage, this Court is not required to finally pronounce
upon the correctness of either interpretation. The Court is required
to examine whether the petitioners have shown a sufficiently
strong case deserving protection till the disputes are finally
adjudicated. In my view, the petitioners have crossed that
threshold. Their claim cannot be described as devoid of substance.
Prima facie support for their case is available from the language
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employed in the Parent Agreement, the fact that all four
agreements were executed contemporaneously on the same day,
the conduct of the parties for more than three decades and the
principles governing of family settlements discussed while deciding
the earlier issues. The petitioners have also relied upon the
surrounding circumstances showing that the restructuring of the
family business was intended to be complete and permanent.
Whether those circumstances establish the petitioners' case is a
matter for final adjudication. Nevertheless, they certainly disclose
prima facie case which deserve examination in arbitration.
184. Another circumstance which, in my view, assumes
importance at this stage is the admitted conduct of the parties over
the last more than thirty-three years. It is not disputed that
throughout this period the petitioners have manufactured and
marketed products under the "Vadilal" brand within their
territories. There is no material before this Court to show that
during this long period any attempt was made by respondent
No.17 to dispute the petitioners' entitlement to use the brand.
Certainly, long user by itself cannot convert a contractual licence
into an irrevocable right. Equally, mere lapse of time cannot
extinguish contractual provisions relating to quality control or
termination. However, such uninterrupted conduct cannot be
treated as an irrelevant circumstance. It constitutes an important
piece of evidence while examining the understanding upon which
both sides acted for several decades. Whether such conduct
amounts to recognition of permanent rights flowing from the
family settlement, or merely reflects performance of the Registered
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User Agreement, is a matter requiring appreciation of evidence. At
the present stage the uninterrupted course of conduct extending
over more than three decades strengthens the petitioners'
contention that their claim cannot be rejected at the threshold.
185. Learned Senior Counsel appearing for respondent No.17 has
laid emphasis upon the termination clause as well as the quality
control provisions incorporated in the Registered User Agreement.
There can be no dispute that these provisions form part of the
contract between the parties. The agreement imposes obligations
regarding maintenance of quality standards, compliance with
statutory requirements, inspection of manufacturing facilities and
recall of product. These clauses cannot be ignored while
interpreting the contract. At the same time, the petitioners have
not accepted either the allegations or the consequences sought to
be drawn by the respondents. They have questioned the manner in
which samples were collected, the methodology adopted by the
laboratories, the authenticity and evidentiary value of the reports,
the alleged non supply of relevant material along with the notices,
compliance with the procedural requirements contemplated under
the agreement and the legality of the process leading to
termination. According to the petitioners, even assuming
deficiencies existed, the contractual mechanism was not followed
in the manner required by the agreement. Thus, the controversy
does not merely concern interpretation of contract but also extends
to disputed questions of fact. Such disputes cannot be decided
merely on affidavits.
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186. The respondents have produced repeated laboratory reports
prepared by NABL accredited laboratories which disclose serious
microbiological contamination in products manufactured by the
petitioners. If these reports are proved in accordance with law and
if their findings are accepted, they may have consequences while
considering the validity of the termination and the rights of the
parties. However, the petitioners have placed on record reports of
other laboratories, third party audit reports and additional
material disputing not only the conclusions recorded in the
respondents' reports, but also the entire methodology adopted for
collection and testing of samples. They have questioned the chain
of custody, the representative nature of the samples, the testing
procedures followed and the conclusions drawn from such reports.
Thus, the Court is confronted with competing material placed by
both sides. Proceedings under Section 9 are not intended to
convert the Court into an expert forum required to determine the
correctness of laboratory reports. Such an exercise would
necessarily require expert evidence and detailed examination
which can be undertaken during arbitral proceedings.
Consequently, this Court cannot conclusively pronounce upon the
correctness of either set of reports.
187. Therefore, although the respondents have raised allegations
relating to compliance with quality standards, those allegations
remain matters of dispute. The existence of such disputes does not
demolish the petitioners' prima facie case. The respondents have
raised issues requiring adjudication. Equally, the petitioners have
placed material questioning the factual basis as well as effect of
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those allegations. Until those disputed questions are determined
after appreciation of evidence, the Court cannot proceed on the
assumption that the respondents' allegations stand established. At
this stage, those allegations constitute part of the controversy.
Consequently, the prima facie case otherwise demonstrated by the
petitioners arising from the family settlement and the surrounding
contractual framework cannot be regarded as having been
displaced merely because the respondents have asserted breaches
under the Registered User Agreement.
188. Having considered the pleadings, documents, rival
submissions and the material available on record, I am satisfied
that, for the purpose of deciding the present petition under Section
9, the petitioners have succeeded in establishing a strong prima
facie case. This conclusion is not intended to determine the validity
of the family settlement, the scope of the Registered User
Agreement, the legality of the termination notice or the correctness
of the laboratory reports. All those issues shall remain open for
adjudication before the Arbitral Tribunal.
Balance of convenience:
189. The next aspect which requires consideration is the question
of balance of convenience. Merely because a party succeeds in
showing a prima facie case does not entitle that party to an order
under Section 9 of the Arbitration and Conciliation Act. The Court
is further required to examine which course would cause lesser
hardship. While undertaking this exercise, the Court is required to
compare the consequences that may follow if interim protection is
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either granted or refused. Such comparison has to be made not by
examining only the inconvenience likely to be suffered by one side,
but by weighing the probable prejudice to both sides. The Court is
required to keep in mind that the purpose of interim protection is
to preserve the subject-matter of the arbitration. Therefore, the
Court has to consider the surrounding circumstances, the nature of
the rights claimed, the long course of conduct between the parties
and the consequences likely to follow during the pendency of the
arbitral proceedings.
190. According to the petitioners, the entire goodwill developed
by them over more than thirty-three years has become connected
with the "Vadilal" brand. It is their case that during this period they
have invested financial resources, planning, and efforts in
establishing manufacturing units, developing customer confidence
and expanding their business throughout their territories.
According to them, every carton, wrapper, advertisement, and
marketing campaign has been built around the "Vadilal" name.
They submit that consumers identify their products because of that
brand and not merely because of the name of petitioner No.3. It is
submitted that if they are compelled to discontinue use of the
"Vadilal" brand, the consequences would extend beyond changing
the name on the packaging. According to them, the entire business
would require reorganisation. Fresh trademarks would have to be
adopted. New packaging material would have to be manufactured.
Licences, advertisements, promotional material, distribution
agreements, dealer arrangements and consumer communication
would all require modification. The petitioners submit that
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rebuilding market recognition after losing a brand which has
existed for more than three decades is not an exercise capable of
being completed within a short period. Even if they succeed before
the learned Arbitral Tribunal, the goodwill, consumer confidence
and market identity lost during the intervening period may never
return. According to them, therefore, refusal of interim protection
would defeat the entire purpose of the arbitration because
restoration of the earlier position may become impossible.
191. The respondents have advanced submission from the
opposite perspective. According to respondent No.17, continuation
of the petitioners' use of the "Vadilal" brand after termination of
the Registered User Agreement would expose consumers to
products which have failed microbiological testing. Learned Senior
Counsel submits that respondent No.17 is the proprietor of the
trademark and bears the responsibility of protecting not only its
goodwill but also the confidence which consumers associate with
the brand. According to the respondents, once repeated laboratory
reports indicated the presence of contamination, respondent No.17
could not remain inactive. It is submitted that every defective
product sold under the "Vadilal" trademark has the potential to
damage the reputation of the brand throughout the country
irrespective of the territory in which products are sold. According
to the respondents, goodwill built over decades may be affected if
consumers begin associating the brand with unsafe products. It is
submitted that no Court should compel the proprietor of a
registered trademark to continue permitting another person to use
that trademark after the licence has been terminated, particularly
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where allegations concerning product quality have been raised.
According to the respondents, the greater hardship would fall
upon them if interim protection is granted because damage to
reputation and public confidence cannot be repaired.
192. In my view, both these submissions deserve consideration.
Neither of them can be brushed aside. The petitioners have
demonstrated that discontinuance of the "Vadilal" brand after more
than three decades is capable of causing extensive disruption.
Equally, the respondents have raised concerns regarding protection
of the goodwill associated with a registered trademark and the
impact of alleged quality deficiencies upon public confidence.
Thus, the Court is not confronted with a case where one side alone
appears likely to suffer prejudice. Both sides have placed before
the Court circumstances which deserve attention. The task of the
Court, therefore, is not to determine which party has a better
commercial claim, but to ascertain which course is likely to
preserve the subject-matter with the least risk of irreversible
prejudice. That exercise has to be undertaken in the limited
jurisdiction under Section 9.
193. If interim protection is refused and the petitioners are held
entitled by the Arbitral Tribunal to continue using the "Vadilal"
brand under the family settlement, restoration of the earlier
position may become extremely difficult. By that stage the
petitioners may have been compelled to withdraw products
available in the market, replace packaging, discontinue advertising
material, modify dealership arrangements, change distribution
systems and educate consumers regarding a new identity. Dealers
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may shift to competing products. Consumers may lose familiarity
with the petitioners' products. Shelf space in the market may be
occupied by competitors. Business relationships developed over
decades may come to an end. Even if the petitioners obtain an
arbitral award, such an award may not be capable of restoring the
position which existed prior to the termination. Loss of consumer
confidence, market recognition, distribution channels and
commercial identity over several decades cannot be reconstructed
by directing payment of compensation. Money may compensate
financial loss, but it may not restore goodwill which has developed
through market presence over a long period. Therefore, refusal of
interim protection carries with it the possibility of consequences
which may become irreversible.
194. On the other hand, if interim protection is granted and the
respondents succeed before the Arbitral Tribunal, respondent
No.17 would have been required to tolerate use of the "Vadilal"
brand by the petitioners during the period necessary for
adjudication of the disputes. It may affect the respondents' position
and control over the trademark during the pendency of the
arbitration. However, such prejudice is capable of being reduced by
interim safeguards. This Court is not powerless while granting
protection. Conditions can be imposed requiring the petitioners to
maintain compliance with all applicable statutory provisions,
preserve records, permit inspection, cooperate in quality testing,
and comply with such safeguards as may become necessary for
protection of consumer interest. Such conditions would reduce the
possibility of prejudice to the respondents during the pendency of
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the arbitral proceedings. Thus, the prejudice likely to be suffered
by the respondents is capable of being controlled through interim
directions.
195. Learned Senior Counsel for respondent No.17 has
emphasised that the controversy concerns public health and
consumer safety. This submission deserves the highest attention.
Protection of consumers occupies a position of paramount
importance. This Court is conscious that no interim order passed
under Section 9 can dilute the obligations imposed by the Food
Safety and Standards Act, the Regulations framed thereunder or
other applicable statutory provisions. Every manufacturer
continues to remain bound by those statutory obligations.
However, the present proceedings do not determine whether the
products manufactured by the petitioners are in fact unsafe. Those
issues remain disputed. Competing laboratory reports have been
placed before the Court. Such disputes cannot be resolved in
proceedings under Section 9 on the basis of affidavits.
Consequently, while consumer safety must remain protected, the
Court cannot proceed upon the assumption that allegation made
by the respondents stands finally proved. Equally, the Court cannot
proceed upon the assumption that the petitioners have disproved
those allegations. The controversy still awaits adjudication upon
evidence.
196. In these circumstances, it appears to me that the concerns
expressed by the respondents can be addressed by imposing
interim safeguards while preserving the petitioners' existing
position. Viewed from this perspective, the comparative hardship
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likely to arise by refusing interim protection appears greater than
the hardship likely to arise by permitting temporary continuation
of the existing arrangement. Immediate discontinuance of a
business carried on for more than three decades is capable of
producing consequences which may extend beyond financial loss.
Such disruption may permanently alter the petitioners' position
even before the Arbitral Tribunal determines whether the
termination was valid. On the contrary, if the respondents succeed,
the continuation during the pendency of the arbitration would
remain only temporary and would operate under safeguards
designed to protect quality standards. Therefore, after balancing
the prejudice likely to be suffered by both sides, the scale appears
to tilt in favour of maintaining the existing arrangement rather
than permitting disruption.
197. Consequently, upon an overall consideration of the rival
submissions, the contract, the long course of conduct between the
parties and the nature of the prejudice likely to arise in either
event, I am of the opinion that the balance of convenience leans in
favour of preserving the existing state of affairs.
Irreparable injury:
198. The next requirement is whether the petitioners have
established that refusal of interim protection would result in
irreparable injury. Mere existence of a prima facie case and balance
of convenience are not sufficient for grant of relief under Section
9. The Court must examine whether the prejudice likely to be
suffered is of such nature that it cannot be adequately remedied.
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The expression “irreparable injury” does not mean that the loss is
incapable of any compensation. What it means is that the injury is
of such character that no subsequent order, whether by way of
damages or otherwise, can restore the party to the position in
which it stood. The Court is therefore required to consider whether
the consequences likely to follow are capable of being repaired
after the award. If restoration itself becomes impossible, the
requirement of irreparable injury stands satisfied.
199. The petitioners contend that the rights asserted are not
confined to licence granted for consideration. According to them,
their claim does not arise because they paid licence fees to
respondent No.17. Their case proceeds under the 1993 Family
Settlement, the Bombay Group surrendered proprietary rights by
transferring its shareholding, management, and control in
respondent No.17 and other family companies. According to them,
this surrender constituted a sacrifice made as part of the family
settlement with the object of permanently resolving disputes
within the family. In consideration of that sacrifice, the Bombay
Group was granted permanent rights to use the "Vadilal" brand
within specified territories. According to the petitioners, this right
constituted one of the benefits flowing from the family settlement.
Therefore, they submit that the dispute cannot be viewed as
termination of commercial arrangement. They contend that what
is sought to be taken away is the consideration which induced the
Bombay Group to relinquish ownership and management rights
more than three decades ago. If this assertion is found to be
correct, temporary deprivation of those rights would defeat the
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object of the family settlement. Such prejudice, travels much
beyond contractual loss.
200. As already discussed while examining the nature of the four
agreements, the petitioners have placed emphasis upon the Parent
Agreement, the Branding Agreement, the Irrevocable Power of
Attorney and the Registered User Agreement being parts of one
composite family arrangement. They contend that all four
documents have to be read together. According to them, the
Registered User Agreement merely provides the mechanism
through which the rights created under the family settlement are
implemented. The respondents dispute this interpretation and
submit that the Registered User Agreement constitutes the sole
source of the petitioners' right to use the trademark. That
controversy survives for final adjudication before the Arbitral
Tribunal. However, if the petitioners' interpretation is accepted, the
consequence of refusing interim protection would be that a party
claiming rights flowing from a family settlement extending over
more than three decades would stand deprived of the principal
benefit even before the arbitral proceedings conclude. Such
deprivation may not be capable of restoration by any subsequent
award. Therefore, the Court cannot ignore the nature of the rights
asserted by the petitioners.
201. Loss of goodwill, reputation, customer confidence, territorial
rights developed over several decades cannot be measured with
mathematical precision. Goodwill is not created in a single
transaction. It develops through quality and commercial dealings
over long periods. The value of such goodwill does not merely
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depend upon annual sales or financial statements. It consists of
consumer confidence, reputation built in the market and the
identity which a particular product acquires amongst the public. If
the petitioners are compelled to discontinue use of the "Vadilal"
brand, many of these commercial advantages may disappear.
Dealers may choose alternative suppliers. Consumers may shift to
competing products. Distribution arrangements may undergo
permanent changes. The association between the petitioners and
the "Vadilal" brand, built over more than three decades, may
disappear. Even if an arbitral award recognises the petitioners'
rights, revival of such goodwill may not follow as a consequence.
For this reason also, the likely prejudice cannot be regarded as
purely financial.
202. It is true that in commercial disputes Courts proceed on the
basis that loss can be compensated by damages. However, that
principle cannot be applied irrespective of the nature of the rights
involved. The present controversy is not confined to compensation
arising from breach of an commercial agreement. The dispute
concerns the existence of a right claimed to have under a family
settlement which has regulated the relationship between the
parties for more than thirty-three years. Whether that claim
succeeds or fails is a matter for the Arbitral Tribunal. Nevertheless,
if the petitioners are found entitled to permanent use of the
"Vadilal" brand, no award may compensate the disruption of
goodwill suffered during the intervening period. The injury
complained of possesses features which cannot be reduced to a
monetary calculation.
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203. The respondents have contended that any loss which the
petitioners may suffer is capable of monetary computation.
According to learned Senior Counsel for respondent No.17, the
petitioners are carrying on a business. Their profits and losses can
be determined from books of account. If they succeed before the
Arbitral Tribunal, damages can be awarded in their favour. It is
therefore submitted that the essential requirement of irreparable
injury is absent. Learned Senior Counsel further submits that
Courts should not grant interim protection merely because one
party alleges commercial inconvenience. According to him, where
the dispute concerns a licence which has been terminated,
monetary compensation constitutes an adequate remedy.
204. This submission deserves consideration. If the present
dispute were confined only to licence granted for consideration
under a agreement, there would be force in the respondents'
contention that damages may be an adequate remedy. In many
commercial disputes arising from termination of distributorships or
licences, compensation may sufficiently protect the aggrieved
party. However, the present proceedings stand upon a different
footing. As noticed earlier, the petitioners assert that their right
flows from a family settlement under which valuable ownership
and management rights were permanently surrendered in
exchange for territorial rights over the "Vadilal" brand. They
further contend that the Registered User Agreement merely
implements those rights. These assertions remain established. Yet,
the existence of such issues itself distinguishes the present case
from an ordinary dispute. Where the controversy concerns the
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existence of permanent rights allegedly arising under a family
settlement for more than three decades, it would be difficult to
hold that monetary damages necessarily constitute a substitute.
Consequently, the respondents' submission cannot be accepted to
deny interim protection.
205. The Court must also examine the prejudice likely to be
suffered by the respondents if interim protection is granted.
Learned Senior Counsel for respondent No.17 has submitted that
continuation of the petitioners' use of the "Vadilal" brand despite
alleged breaches may adversely affect the goodwill associated with
the trademark. It is further submitted that if products not
conforming to the quality standards continue to reach consumers
under the "Vadilal" name, the reputation of the brand may suffer. If
those allegations are established, the respondents may have
legitimate grounds for complaint. The Court therefore accepts that
the apprehension expressed by the respondents cannot be ignored
merely because the petitioners dispute the allegations.
206. At the same time, the existence of such apprehension does
not require refusal of interim protection. The Court is required to
consider whether the respondents' concerns can be safeguarded
during the pendency of the arbitral proceedings without permitting
alteration of the parties' relationship. In my opinion, such
protection is possible. The petitioners can be directed to continue
compliance with applicable statutory requirement under the Food
Safety and Standards Act and the Rules and Regulations framed
thereunder. They can also be required to preserve manufacturing
records, cooperate with reasonable inspection in accordance with
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the contract, preserve samples wherever required, permit
independent laboratory testing whenever circumstances justify
such testing and continue to comply with all applicable regulatory
obligations. Such directions would not determine the correctness
of either party's case. They would merely ensure that consumer
protection remain safeguarded while the contractual disputes are
adjudicated by the Arbitral Tribunal.
207. It also deserves notice that the respondents' grievance
regarding quality standards constitutes one of the disputes
requiring adjudication in arbitration. The petitioners have disputed
the laboratory reports relied upon by the respondents. They have
questioned the sampling process, testing methodology, chain of
custody, communication of reports and the procedure allegedly
adopted before termination. They have also relied upon other
reports and audit material in support of their defence. At this stage
the Court cannot undertake a detailed evaluation of these
materials. Consequently, the respondents' apprehension cannot be
treated as established. Pending such adjudication, preservation of
the existing position subject to safeguards appears to constitute a
balanced course.
208. Another circumstance is that the petitioners have admittedly
carried on business under the "Vadilal" brand since 1993. The
present controversy has arisen only after issuance of notices during
the year 2025 and the subsequent termination dated 26 May 2026.
Whether the respondents were justified in taking those steps
remains a matter for arbitration. However, the existence of an
uninterrupted relationship extending over more than three
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decades strengthens the petitioners' submission that
discontinuance may produce consequences incapable of reversal.
Disruption of commercial relationships results in consequences
which cannot be quantified in monetary terms. This aspect also
lends support to the petitioners' contention regarding irreparable
injury.
209. Accordingly, after considering the rival submissions, the long
duration of the parties' relationship, the nature of the rights
asserted under the family settlement and the prejudice likely to be
suffered by both sides, I am satisfied that the requirement of
irreparable injury also stands established in favour of the
petitioners. Preservation of the existing arrangement during the
pendency of the arbitral proceedings appears more conducive to
protecting the subject-matter of the arbitration than permitting
alteration of the parties' relationship.
Conclusions and Prima Facie Findings:
210. Having considered the pleadings, the documents executed on
30 March 1993, the submissions advanced on behalf of all the
parties and the authorities relied upon by them, this Court is,
prima facie, of the opinion that the disputes raised by the
petitioners cannot be treated as arising only out of the Registered
User Agreement. The material placed on record discloses
substantial case that the Memorandum of Agreement, the
Branding Agreement, the Registered User Agreement and the
Irrevocable Power of Attorney have been intended to operate
together as parts of one Family Settlement. Therefore, for the
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limited purpose of considering interim protection, this Court is
satisfied that the petitioners have established a prima facie case
requiring preservation of the subject matter of the dispute until the
learned Arbitral Tribunal adjudicates upon the rights and liabilities
of the parties.
211. In view of the foregoing discussion and for the reasons
recorded hereinabove, the following order is passed:
(i) The present petition is partly allowed;
(ii) Pending commencement, continuance, and conclusion
of the arbitral proceedings and for a period of ninety days
after publication of the arbitral award or until further orders
of the learned Arbitral Tribunal, whichever is earlier,
respondent No.17, respondent No.18 and the surviving
respondent Nos.3 to 9, 12, 13 and 15, their servants, agents,
directors, officers, employees, assigns or any person claiming
through or under them are restrained from acting upon or
giving effect to the communication dated 26 May 2026 in so
far as it seeks to interfere with, obstruct or prevent the
petitioners from continuing to exercise the disputed rights
claimed under the Family Settlement dated 30 March 1993;
(iii) Respondent No.17, respondent No.18 and the surviving
respondent Nos.3 to 9, 12, 13 and 15 are further restrained
from interfering with the petitioners' continued use of the
"Vadilal" brand within the territories claimed by the
petitioners under the Family Settlement, subject to the
conditions contained in this order;
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(iv) Respondent No.17, respondent No.18 and the surviving
respondent Nos.3 to 9, 12, 13 and 15 are restrained from
transferring, assigning, licensing, encumbering, creating any
third party rights or otherwise dealing with the disputed
rights forming the subject matter of the present proceedings
in any manner;
(v) The above protection shall not be construed as
recognition of any final right in favour of the petitioners or
as invalidating the termination dated 26 May 2026. All
questions relating to validity of the termination,
interpretation of the agreements and the respective rights of
the parties are kept open;
(vi) Since the respondents have raised serious allegations
regarding quality, standards, and possible prejudice to
consumers, the petitioners shall continue to manufacture and
store all products strictly in accordance with the provisions
of the Food Safety and Standards Act, 2006, the Rules and
Regulations framed thereunder and other applicable
statutory requirement;
(vii) The petitioners shall continue to maintain all licences,
statutory approvals and quality certifications required under
law throughout the pendency of the arbitral proceedings;
(viii) The petitioners shall maintain complete manufacturing
records, batch records, laboratory reports, quality control
reports and inspection reports relating to all products sold
under the "Vadilal" brand. Such records shall be preserved
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and shall be produced before the learned Arbitral Tribunal
whenever directed;
(ix) Respondent No.17 shall be entitled, after giving not
less than twenty-four hours' prior written notice, to have
reasonable inspection of the manufacturing facilities and
quality control records of the petitioners through authorised
representatives, provided that such inspection shall not
obstruct the petitioners' business operations;
(x) If any dispute arises regarding quality of any product,
samples shall be drawn in the presence of representatives of
both sides, properly sealed and forwarded to an NABL
accredited laboratory or as may be directed by the Arbitral
Tribunal. Copies of all reports shall be simultaneously
furnished to both sides;
(xi) The petitioners shall immediately comply with every
statutory direction issued by any competent food safety or
regulatory authority. Nothing contained in this order shall
prevent any statutory authority from exercising its powers
under the applicable law in the interest of public health;
(xii) Neither party shall issue any public communication or
representation stating that this Court has finally recognised
or rejected the rights of either side. The present order shall
not be projected as a final adjudication;
(xiii) Neither party shall create any irreversible third party
rights in relation to the disputed trademark rights or the
rights claimed under the Family Settlement without
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obtaining appropriate orders from the Arbitral Tribunal or
the competent Court;
(xiv) In the event the proposed scheme of amalgamation
involving respondent Nos.17 and 18 is sanctioned during the
pendency of the arbitral proceedings, such amalgamation
shall remain subject to the outcome of the arbitration and
shall not by itself extinguish, enlarge or otherwise affect the
disputed rights claimed by either side;
(xv) It is clarified that no operative relief is granted against
respondent Nos.1, 2, 10, 11, 14 and 16, as they are stated to
have expired. Liberty is reserved to the parties to take
appropriate steps in accordance with law, if required;
(xvi) Liberty is granted to either party to approach the
learned Arbitral Tribunal immediately upon its constitution
for modification, variation, or vacation of the interim
measures granted by this Court. The learned Arbitral
Tribunal shall decide such application independently and in
accordance with law without being influenced by any prima
facie observations contained in this order.
(xvii) The observations contained in this judgment are purely
prima facie and have been recorded only for deciding the
present petition under Section 9 of the Arbitration and
Conciliation Act. They shall not bind the learned Arbitral
Tribunal while deciding all issues relating to jurisdiction,
arbitrability, validity of the termination, interpretation of the
agreements or the rights and liabilities of the parties.
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(xviii) There shall be no order as to costs.
(AMIT BORKAR, J.)
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