Parle Agro’s Franchise Rights of Non-Compete Clause against sister concern
Competition through An Affiliate or Sister Concern is still Competition affecting Non-compete Rights of Franchise Agreement
Section 9 jurisdiction can extend to a non-signatory entity where such relief is necessary to protect the subject matter of arbitration and where the contract itself contemplates indirect conduct through associated concern
A non-compete clause binds not only the contracting franchisee but may also restrain affiliated entities used as vehicles to carry on prohibited competing business
Section 9 Interim Relief – Enforcement of Non-Compete Clause & Franchise Agreement
The Petitioner, Parle Agro Private Limited (“PAPL”), is an Indian company carrying on the business of beverages and is the proprietor of, among others, the brands “BAILLEY”, “BAILLEY ONE”, “Frooti”, “Appy” and “Appy Fizz”. Under the Franchise Agreements, Respondent No. 1, Udayak Agro Products Pvt. Ltd., and Respondent No. 2, KL Beverages LLP, were appointed as franchisees for manufacturing and selling PAPL’s packaged drinking water and beverages in the North-Eastern region. Both Respondents belong to the KL Group. The KL Group is controlled by M.K. Agarwala, Raj Shekhar Agarwal, Nikita Agarwal and Sangeeta Agarwal. These persons are partners of Respondent No. 2. M.K. Agarwala, Raj Shekhar Agarwal and Sangeeta Agarwal are directors of Respondent No. 1. Rajshekhar Constructions Private Limited is another group company. PAPL’s business relationship with the KL Group goes back to the year 2001, when Respondent No. 1 was first appointed as PAPL’s franchisee for packaged drinking water under the Franchise Agreement dated 31 May 2001. That arrangement was continued through successive Franchise Agreements and continues under the Udayak Franchise
Agreement. During this long business relationship, PAPL permitted the Respondents to use and have access to its intellectual property, technical know-how, quality manuals, manufacturing processes, vendor and distribution networks and confidential business information. The Franchise Agreements contain detailed provisions relating to non-compete obligations, exclusivity, confidentiality, intellectual property and protection of technical know-how. These provisions prohibit the Respondents and their associate or group entities from directly or indirectly manufacturing or dealing with competing products. They restrict the Respondents from allowing competitors to use the franchise facilities, using their association with PAPL for carrying on competing business, or using PAPL’s confidential know-how and proprietary information for any competing activity. 3. The present Petition has been filed because, during a audit conducted in March 2026, PAPL found that the Respondents had started manufacturing and distributing packaged drinking water under the brand “SURE” from the franchise premises. investigation showed that production and sale of this competing product had started. It was found that the purchase of raw material required for PAPL’s products had reduced and that Respondent No. 2 was actively carrying on the competing packaged drinking water business.
knowledge of the framework. Respondent No.1 had agreed that it would not carry out the prohibited activity directly or indirectly through an associate or sister concern. Therefore, at this stage, the Respondents cannot rely only upon the financial consequences of continuing the competing activity as a reason to ignore the restriction. The balance of convenience does not require refusal of interim relief. Rather, it requires a carefully limited order which protects the Petitioner’s rights without unnecessarily interfering with independent and lawful business activities of the Respondents.
Pending the adjudication of the disputes between the parties before the learned Sole Arbitrator, the Respondents, their affiliates, associates, sister concerns, group companies and/or such other organisations claiming through or under them are hereby restrained, directly or indirectly, from manufacturing, preparing, packaging, distributing, marketing, selling or otherwise dealing in “SURE” water or any other packaged drinking water product competing with the products of the Petitioner, in a manner contrary to the obligations contained in the Franchise Agreements;
Judgment dated 23.9.2026 of the High Court of Bombay in Commercial Arbitration Petition (L) No.25994 of 2026 of Parle Agro Private Limited Vs. Udayak Agro Products Pvt Ltd and another
