Bombay HC restrains rival bottled-water brand without deciding a Section 27 restraint-of-trade question

The Bombay High Court granted Parle Agro Private Limited (PAPL) interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, against two of its bottled-water franchisees after an audit found them manufacturing and selling a competing brand, "SURE", from the franchise premises. PAPL's case rested on non-compete clauses in two separate Franchise Agreements: one, from 2014, still subsisting, and another, from 2018, already terminated. The franchisee under the terminated agreement argued that restraining it after termination would enforce a restraint void under Section 27 of the Indian Contract Act, 1872, relying on Niranjan Shankar Golikari, Gujarat Bottling Co. v. Coca Cola Co. and Percept D'Mark v. Zaheer Khan.

The Court declined to decide that harder question at the interim stage. It found, prima facie, that the two respondents shared common premises, personnel and business links contemplated by the 2014 Agreement's negative covenant, which by its terms operated "during the subsistence" of that still-continuing agreement. Since relief could rest on this subsisting obligation alone, the Court restrained both respondents from manufacturing or dealing in competing products and ordered disclosure of related records, while expressly leaving the Section 27 question over the terminated agreement's post-termination restraint to the arbitral tribunal.