The Bombay High Court has held that rights claimed under a 33-year-old family settlement governing the famous Vadilal ice cream brand cannot be treated as mere commercial licences capable of termination without irreparable prejudice. Granting interim protection, the Court observed that disruption of goodwill developed over decades cannot be adequately compensated by monetary damages.

The Court was considering a dispute concerning rights over the Vadilal brand arising from a 1993 family settlement between members of the Vadilal family. The respondents contended that the arbitration clause contained in the Parent Agreement could not extend to the Branding Agreement, Irrevocable Power of Attorney and Registered User Agreement, relying upon the principles laid down in Duro Felguera, S.A. v. Gangavaram Port Ltd. and M.R. Engineers and Contractors Pvt. Ltd. v. Som Datt Builders Ltd.. The Court observed that those decisions dealt with commercial contracts and were required to be considered in the context of the nature of the present arrangement, which prima facie constituted a composite family settlement comprising multiple interconnected documents.

Justice Amit Borkar observed, “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...Where the controversy concerns the 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”.

“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…”, the Bench further noted.

Advocate Mustafa Doctor appeared for the petitioner and Senior Advocates Venkatesh R. Dhond, Shiraz Rustomjee, Zal Andhyarujina appeared for the respondents.

"...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", the Bench had said.

Pertinently, the Court held that while respondents could raise quality concerns, such grievances did not justify refusing interim protection. Instead, the petitioners could be directed to comply with statutory requirements under the Food Safety and Standards Act and permit independent laboratory testing.

“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 controversy”, the Bench noted.

The Bench noted that the dispute was not about reviving a terminated licence under the Registered User Agreement. Instead, the Court was required to protect disputed rights allegedly flowing from the broader family settlement, which were merely implemented through the Registered User Agreement and Irrevocable Power of Attorney. The Court observed that termination of the Registered User Agreement would not automatically extinguish those rights if they independently arose from the family settlement. The interim protection, therefore, only preserved the existing position pending arbitration and did not create any new rights.

“Where the controversy concerns the 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.”

“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 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”, the Bench further noted.

The Court found that the petitioners had established a prima facie case and granted interim relief, restraining respondents from acting upon the termination notice. The protection was qualified to ensure that consumer safeguards remained intact pending the arbitral tribunal's final adjudication on the validity of the termination and the respective rights of the parties.

“...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 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...”, the Bench said.

“…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”, the Bench further noted.

Cause Title: Shailesh R. Gandhi & Ors. v. Late Ramchandra R. Gandhi & Ors. Comm Arbitration Petition (L) No.18386 Of 2026

Appearances:

Petitioners: Mustafa Doctor, Sr. Adv., Rohaan Cama, Hiren Kamod, Spenta Kapadiya, Kyrus Modi i/by IndusLaw.

Respondents: Venkatesh R. Dhond, Sr. Adv., Shiraz Rustomjee, Sr. Adv., Zal Andhyarujina, Sr. Adv. i/by Trilegal and AVP Partners.

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