Delhi High Court: In a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996, seeking grant of an interim order restraining Encalm Hospitality (‘Encalm’) and its representatives from entering a contract with Dreamfolk’s clients, the Single Judge Bench of Amit Bansal, J, held that there was no exclusivity between Dreamfolk and its clients. As such, the clients were free to enter into similar agreements with other service providers, including Encalm. Thus, the Court declined to restrain Encalm from contracting with Dreamfolk’s clients.
Background
The petitioner, Dreamfolks is engaged in the business of providing travel and lifestyle services including lounge access, meet and assist, airport transfers, food and beverages, spa, transit hotels/ nap rooms, golf, and more. The respondent, Encalm is engaged in the business of acquiring licences from airport authorities for managing, operating and running the lounges.
Dreamfolks entered an agreement with Encalm to provide lounge services to customers at the airport. Dreamfolks had agreements with various banks (‘clients’) that issued credit cards that could be used to access lounge services at the airport run by Encalm. For providing lounge access, Dreamfolks paid a fee to Encalm which it recovered from its clients.Enclam had sought to prematurely terminate the contract by giving a 90-day notice.
Dreamfolks contended that Encalm had breached their agreement by directly contracting with its clients which resulted in significant loss of business to them. They had further argued that Encalm was bound by the terms of the agreement during the 90-day period as well and was accordingly restrained from contracting with its clients either directly or indirectly.
Analysis, Law and Decision
The Court noted that neither did the agreement stipulate that Dreamfolks’ clients were its exclusive clients nor was there any material put on record to suggest that the said clients had not entered into similar agreements with other service providers like Dreamfolk.
Additionally, the Court noted that the clients of Dreamfolk had similar arrangements with other third parties as well where Encalm was providing services through third-party service providers. The Court opined that Dreamfolk had failed to show that there existed any exclusivity between Dreamfolk and its clients. The agreement between Dreamfolk and Encalm did not bar Encalm from entering into similar arrangements with other service providers. The Court also observed that while the terms of the contract barred ‘representatives’ of Encalm from engaging into business with Dreamfolks’ clients, the third-party service-providers could not be construed as ‘representatives’ of Encalm.
Thus, the Court declined to restrain Encalm from contracting with Dreamfolks’ clients and instead reiterated the direction passed by the Court vide order dated 28-8-2025 wherein Encalm had been directed to maintain complete records of accounts in respect of all transactions entered by Encalm with the 21 clients of Dreamfolk.
[Dreamfolks Services Ltd. v. Encalm Hospitality Pvt. Ltd., 2025 SCC OnLine Del 6037, decided on 16-9-2025]
Advocates who appeared in this case:
For the Petitioner: Amit Sibal, Pavan Narang, Senior Advocates, Mayank Bhargava, Abhishek Batra, Vinamra Kopahira, Ankit Handa, Suditi Batra, Rajdeep Saraf, Himanshu Sethi, Advocates
For the Respondent: Rajiv Nayar, Senior Advocate, Anirudh Bakhru, N.S. Ahluwalia, Deepak Chawla, Adhish Sharma, Nitin Pandey, Advocates
Buy Arbitration and Conciliation Act, 1996 HERE
