Bombay High Court Restrains Parle Agro's Franchisee From Selling SURE Water Competing With BAILLEY
The Bombay High Court has granted interim protection to Parle Agro Private Limited in its arbitration dispute with its franchisee Udayak Agro Products Pvt. Ltd. and Udayak's connected entity, K.L. Beverages LLP, over the manufacture and sale of competing packaged drinking water.
Justice Amit Borkar found a prima facie case that the manufacture of SURE water by K.L. Beverages was covered by the indirect competition restrictions in Parle Agro's franchise agreement with Udayak.
Under the agreement, Udayak was appointed to manufacture and sell Parle Agro's BAILLEY and BAILLEY ONE packaged drinking water in Assam and Meghalaya.
The court found that Parle Agro had made out a prima facie case that the competing packaged drinking water activity carried on through K.L. Beverages was covered by the indirect competition restrictions in Udayak Agro's 2014 franchise agreement.
The agreement prohibits Udayak from carrying on competing business directly or indirectly through an associate or sister concern. A separate clause also extends the restriction to sister concerns, group companies, associates, and affiliates.
The court observed, “The Court has to see all the material together. If every document is looked at separately, the Respondents may have some explanation for each circumstance. But the combined effect of the material cannot be ignored.”
The dispute stems from a business relationship between Parle Agro and the KL Group dating back to 2001. Under a February 5, 2014 franchise agreement, Udayak Agro was appointed to manufacture and sell Parle Agro's BAILLEY and BAILLEY ONE packaged drinking water in Assam and Meghalaya. The agreement remains valid until March 31, 2028.
K.L. Beverages was separately appointed under a July 16, 2018 franchise agreement for beverages. The manufacturing and distribution operations under that agreement have since stopped.
The dispute arose after a Parle Agro audit on March 18 and 19, 2026 found “SURE” packaged drinking water being manufactured and stored by K.L. Beverages. K.L. Beverages did not deny manufacturing SURE, while Udayak admitted that SURE and BAILLEY were competing packaged drinking water products operating in the same market.
Parle Agro raised the alleged breach on March 25, 2026 and sought meetings with the respondents in April. After further discussions, it approached the High Court in July under Section 9, seeking interim protection pending arbitration.
Parle Agro argued that Udayak and K.L. Beverages were sister concerns within the KL Group, under common family ownership and control, and operated through common personnel and infrastructure.
Udayak maintained that the two companies were separate legal entities and denied that it was carrying on the SURE business. K.L. Beverages relied on its separate 2018 agreement and contended that its competing business was independently operated.
The court held that Parle Agro did not have to show that Udayak itself manufactured the competing product. It noted that Clause 5 expressly contemplated competing business being carried on indirectly through another connected concern.
The court observed that requiring proof of Udayak's own manufacture would effectively remove the word “indirectly” from the agreement.
The court found the audit material, corporate relationship, common premises and personnel, and water-manufacturing activity at K.L. Beverages' facility sufficient to justify interim protection.
It also made clear that these were prima facie findings, not a final determination of the parties' rights. Whether K.L. Beverages fell within the expressions “associate”, “sister concern”, “affiliate” or “group company” under the 2014 agreement was left for determination by the arbitrator.
The court similarly left open the question of whether Parle Agro's confidential information or know-how had been used in the competing business.
On the need for interim protection, Justice Borkar observed, “If no interim protection is granted and the competing activity continues, the position may become more difficult to restore. The competing business may get further customers, distributors, market relationships and information.”
The order also restrains the respondents from using or exploiting Parle Agro's confidential information, trade secrets, technical know-how, manufacturing processes, quality manuals, and other proprietary business information for the competing activity.
K.L. Beverages can continue independent and lawful business outside the prohibited competing packaged drinking water activity, provided it does not involve use of Parle Agro's protected information, know-how, facilities, machinery or business networks contrary to the 2014 agreement.
The court further directed disclosure within four weeks of particulars available in the respondents' records concerning competing packaged drinking water products manufactured, bottled, packaged, distributed, marketed, or sold by them or through their affiliates, associates, sister concerns or group entities from February 5, 2014, till date.
For Petitioner (Parle Agro Private Limited): Senior Advocate Dr. Birendra Saraf, with Advocates Jay Sanklecha, Aditya Malhotra, Kanika Goenka, Prachi Gupta, Swagata Ghosh and Pranay Malade.
For Respondent (Udayak Agro Products Pvt. Ltd.): Advocate Prathamesh Kamat, with Advocate Sumit Towari.
For Respondent (K.L. Beverages LLP): Senior Advocate Ravi Kadam, with Advocates Shanay Shah, Aditi Deshpande, Tejas Popat and Rupal Dugar, instructed by J. Sagar Associates.