The Bombay High Court, in a detailed judgment, has addressed a complex dispute arising from a 1993 family settlement between two branches of the Gandhi family, governing the Vadilal business empire. The court held that an arbitration clause contained in the parent agreement extended to disputes arising from interconnected agreements executed as part of the same family settlement. This ruling underscores the principle that where multiple agreements form part of a composite transaction, disputes arising under them may be governed by a single arbitration agreement, even if some agreements lack an explicit arbitration clause. The court also granted interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, restraining the respondents from interfering with the petitioners' use of the 'Vadilal' brand during the pendency of arbitral proceedings.
Background & Facts
The Dispute
The dispute originates from a family settlement dated 30 March 1993, between the Bombay Group (represented by the petitioners) and the Ahmedabad Group (represented by the respondents) of the Gandhi family. The settlement restructured the Vadilal business, dividing it between the two groups. The Bombay Group, comprising Shailesh R. Gandhi and Bela S. Gandhi, surrendered its shareholding and management rights in Vadilal International Private Ltd. (respondent No. 17) in exchange for exclusive territorial rights to manufacture, sell, and distribute ice cream and other products under the 'Vadilal' brand in the states of Maharashtra, Goa, Karnataka, Kerala, and Andhra Pradesh (including Telangana). The Ahmedabad Group retained rights over the remaining territories in India.
Key Facts
30 March 1993: Four agreements were executed simultaneously as part of the family settlement:
Memorandum of Agreement (Parent Agreement): Recorded the broad division of business between the two groups.
Branding Agreement: Regulated the use of the 'Vadilal' brand by both groups.
Irrevocable Power of Attorney: Authorised the Bombay Group to execute Registered User Agreements on behalf of respondent No. 17.
Registered User Agreement: Granted petitioner No. 3 (Vadilal Dairy International Ltd.) the right to use the 'Vadilal' trademarks in its exclusive territories.
Territorial Division: The Parent Agreement allotted Maharashtra, Goa, Karnataka, Kerala, and Andhra Pradesh (including Telangana) exclusively to the Bombay Group, while the remaining territories were allotted to the Ahmedabad Group.
Long-standing Conduct: For over 33 years, the petitioners carried on business under the 'Vadilal' brand without interference from the respondents.
26 May 2026: Respondent No. 17 issued a communication purporting to terminate the Registered User Agreement and the Irrevocable Power of Attorney, alleging breaches of quality control obligations by the petitioners.
Procedural History
10 March 2026: Petitioners invoked arbitration under Clause 10.1 of the Parent Agreement.
26 May 2026: Respondent No. 17 terminated the Registered User Agreement and revoked the Irrevocable Power of Attorney.
June 2026: Petitioners filed the present Arbitration Petition (L) No. 18386 of 2026 under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim protection to continue using the 'Vadilal' brand.
June 2026: Proceedings pending before the City Civil Court at Ahmedabad, where the petitioners filed an application under Section 8 of the Arbitration Act for reference to arbitration.
The Parties' Positions
Petitioners' Contention: The four agreements executed on 30 March 1993 form one composite family settlement. The arbitration clause in the Parent Agreement governs disputes arising under all four agreements. The termination of the Registered User Agreement cannot extinguish the permanent rights granted under the family settlement.
Respondents' Contention: Each agreement is independent, with its own dispute resolution mechanism. The Registered User Agreement, which contains an exclusive jurisdiction clause in favour of Ahmedabad Courts, is the sole source of the petitioners' rights. Its termination extinguishes those rights, and the arbitration clause in the Parent Agreement does not extend to disputes under the other agreements.
Relief Sought
The petitioners sought interim protection under Section 9 to restrain the respondents from interfering with their use of the 'Vadilal' brand during the pendency of arbitral proceedings.
The Legal Issue
The central question was whether the arbitration clause contained in Clause 10.1 of the Parent Agreement extends to disputes arising under the Branding Agreement, Irrevocable Power of Attorney, and Registered User Agreement, or whether each agreement constitutes an independent contract governed by its own dispute resolution mechanism.
Arguments Presented
For the Petitioners
The four agreements executed on 30 March 1993 form one composite family settlement, with the Parent Agreement as the umbrella document.
The arbitration clause in the Parent Agreement governs disputes arising under all interconnected agreements.
The termination of the Registered User Agreement cannot extinguish the permanent rights granted under the family settlement.
The conduct of the parties for over 33 years supports the interpretation that the agreements are interconnected.
The Group of Companies doctrine applies to respondent Nos. 17 and 18, as they are not strangers to the family settlement.
For the Respondents
Each agreement is independent, with its own dispute resolution mechanism. The Registered User Agreement contains an exclusive jurisdiction clause in favour of Ahmedabad Courts.
The arbitration clause in the Parent Agreement does not extend to disputes under the other agreements.
The termination of the Registered User Agreement is valid and extinguishes the petitioners' rights to use the 'Vadilal' brand.
The Group of Companies doctrine does not apply, as respondent No. 18 is not a party to the agreements and has no connection with the dispute.
This Court lacks territorial jurisdiction, as the arbitration clause specifies jurisdiction in the territory of the party other than the one who necessitated arbitration.
The Court's Analysis
The court undertook a detailed examination of the nature of the four agreements, the principles governing arbitration clauses, and the applicability of legal doctrines such as the Group of Companies doctrine.
Nature of the Four Agreements
The court observed that the Parent Agreement recorded the broad division of the family business and contemplated the execution of three other agreements for implementing its terms. The Branding Agreement, Irrevocable Power of Attorney, and Registered User Agreement were executed simultaneously and appear to be interconnected parts of one composite family settlement. The court noted that the agreements repeatedly refer to one another and were executed as part of a comprehensive restructuring of the family business.
"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."
Applicability of the Arbitration Clause
The respondents relied on judgments such as M.R. Engineers & Contractors (P) Ltd. v. Som Datt Builders Ltd. and Duro Felguera, S.A. v. Gangavaram Port Ltd., arguing that each agreement must be treated independently unless there is a clear intention to incorporate the arbitration clause from one agreement into another. The court acknowledged these principles but distinguished the present case on the grounds that the agreements were executed as part of a family settlement, not a commercial transaction.
"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... 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."
The court held that the arbitration clause in the Parent Agreement prima facie extends to disputes arising under the interconnected agreements, as they form part of one composite family settlement.
Group of Companies Doctrine
The court examined whether respondent Nos. 17 and 18, who were not signatories to the Parent Agreement, could be bound by the arbitration clause. The petitioners argued that respondent No. 17 was a confirming party to the Branding Agreement, executed the Registered User Agreement, and acted upon the family settlement for over 33 years. Respondent No. 18 was proposed to merge with respondent No. 17 under a scheme pending before the National Company Law Tribunal (NCLT).
The court relied on the Group of Companies doctrine, as explained in Cox & Kings Ltd. v. SAP India Pvt. Ltd., which holds that non-signatories may be bound by an arbitration agreement if their conduct indicates an intention to be bound. The court held that respondent No. 17 prima facie accepted and acted upon the arbitration clause, while respondent No. 18 could not be treated as a stranger to the dispute.
"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."
Territorial Jurisdiction
The court interpreted Clause 10.1 of the Parent Agreement, which provides that arbitration proceedings shall be subject to the jurisdiction of the territory of the party other than the party "who has necessitated the arbitration proceedings." The respondents argued that the petitioners, having invoked arbitration, necessitated the proceedings, and thus jurisdiction lay in Ahmedabad. The court rejected this interpretation, holding that the phrase "who has necessitated the arbitration proceedings" refers to the party whose conduct gave rise to the dispute. Since the petitioners alleged that the respondents' conduct necessitated arbitration, jurisdiction prima facie lay in Mumbai.
Effect of Termination of the Registered User Agreement
The respondents argued that the termination of the Registered User Agreement extinguished the petitioners' rights to use the 'Vadilal' brand. The court distinguished this case from disputes involving termination of a commercial licence, noting that the petitioners' rights arose under the family settlement, not solely under the Registered User Agreement. The court held that the termination of one implementing document could not extinguish rights created under the larger family settlement.
"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 cannot be equated with revival of a terminated licence."
The Verdict
The court allowed the petition in part, granting interim protection under Section 9 to the petitioners. The court:
Restricted respondent Nos. 1 to 18 from interfering with the petitioners' use of the 'Vadilal' brand in their exclusive territories during the pendency of arbitral proceedings.
Directed the petitioners to comply with all applicable statutory provisions under the Food Safety and Standards Act, 2006, and maintain records of manufacturing, quality control, and distribution.
Clarified that the observations made in the judgment are tentative and shall not bind the Arbitral Tribunal while adjudicating the disputes.
Held that the arbitration clause in the Parent Agreement prima facie governs disputes arising under all four agreements, and this Court possesses territorial jurisdiction to entertain the petition.
What This Means For Similar Cases
Composite Agreements Under Family Settlements
Where multiple agreements are executed as part of a family settlement or composite transaction, courts may treat them as interconnected documents governed by a single arbitration clause, even if some agreements lack an explicit arbitration clause.
Practitioners should emphasise the substance of the transaction rather than treating each agreement in isolation. The court will examine the intent of the parties, the conduct over time, and the interconnectedness of the agreements to determine the scope of the arbitration clause.
Group of Companies Doctrine
The Group of Companies doctrine may bind non-signatories to an arbitration agreement if their conduct indicates an intention to be bound. This is particularly relevant in family settlements or corporate restructurings involving multiple entities.
Practitioners should plead and prove the role of non-signatories in negotiating, executing, or performing the agreements to invoke this doctrine successfully.
Territorial Jurisdiction in Arbitration Clauses
Arbitration clauses specifying jurisdiction based on the party "who has necessitated the arbitration proceedings" should be interpreted to mean the party whose conduct gave rise to the dispute, not merely the party who invoked arbitration.
Practitioners should carefully draft arbitration clauses to avoid ambiguity, particularly in multi-agreement transactions, to prevent jurisdictional disputes.
Interim Protection Under Section 9
Courts may grant interim protection under Section 9 to preserve the status quo during arbitral proceedings, particularly where the rights claimed arise under a family settlement or composite transaction.
Practitioners should highlight the irreparable injury likely to result from refusal of interim protection, such as loss of goodwill, market identity, or long-standing business relationships, which cannot be compensated by monetary damages.
Conditions may be imposed to safeguard the interests of the opposing party, such as compliance with statutory obligations and quality control measures.
