The Bombay High Court dismissed a Section 9 petition seeking to enforce a non-compete clause against a third-party non-signatory. The Court held that arbitration-related interim relief cannot bind non-signatories absent clear proof of alter-ego status or collusion, reaffirming privity of contract and corporate separateness.

Legal Issue 

Whether a corporate entity can invoke Section 9 of the Arbitration Act to obtain an interim injunction against a third-party non-signatory to enforce a "Non-Compete" covenant, without establishing a clear "alter ego" or collusive relationship.

Brief Facts 

The Petitioner entered into a Joint Venture (JV) with Respondents 1 to 4 to organize "Gifts & Stationery" exhibitions, featuring a restrictive covenant prohibiting the Respondents from organizing competing events for three years post-termination. Following a breakdown in the corporate relationship, the Petitioner alleged that the Respondents were circumventing this non-compete clause by indirectly organizing a competing "Stationery World" exhibition through Respondent No. 6, a third-party entity. The Petitioner sought urgent interim measures to protect its commercial interests and brand exclusivity.

Court’s Reasoning 

The Court emphasized the principle of privity of contract, noting that arbitration clauses and restrictive covenants generally do not bind non-signatories. From a corporate legal perspective, the Court found that the Petitioner failed to provide sufficient evidence to "pierce the corporate veil" or prove that Respondent No. 6 was a "front" or an "alter ego" for the JV partners. The Court also critiqued the Petitioner's lack of "corporate alacrity," noting a significant delay in seeking relief despite prior knowledge of the competing exhibition. The Court reasoned that Section 9 cannot be used as a tool to bypass the fundamental requirement that interim measures against third parties must relate to property already within the subject matter of the arbitration.

Judgment 

The Petition was dismissed. The Court held that the Petitioner failed to establish a prima facie case for an injunction against a third party and clarified that the Petitioner’s remedy, if any, lies in seeking commercial damages during the final arbitration.

Subsequent Development 

This judgment reinforces the autonomy of separate corporate legal personalities in the context of arbitration. It signals to corporate entities that restrictive covenants in JV agreements must be drafted with precision and that courts will not easily extend non-compete obligations to third parties without ironclad proof of collusion or corporate identity overlap.

Access the official judgement/order here

Case Title: Messe Frankfurt Trade Fairs India Pvt. Ltd. v. Netlink Solutions India Limited & Ors.

Neutral Citation: 2026:BHC-OS:1561

Court: High Court of Judicature at Bombay (Original Side)

Bench: Justice Sandeep V. Marn