Bombay High Court: In a petition raising the issue whether interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 (‘A&C Act’) could be granted to restrain imminent trade exhibitions on the allegation that they breached noncompete and non-solicit covenants under an Asset Purchase Agreement (‘APA’) and its amendment, a Single Judge Bench of Sandeep V. Marne, J., denied relief to petitioner (‘Messe Frankfurt’) under Section 9 of the A&C Act and observed that noncompete covenant is not binding on non-signatory employee or third-party organiser.
The Court noted the delay by Messe Frankfurt in filing the petition, absence of adequate material to establish connivance, non-binding nature of the covenant vis-à-vis the non-signatory former employee, and the independent third-party status of the ostensible organiser, and held that no prima facie case was made out and consequently declined to grant any interim relief, dismissing the petition.
Background:
The petitioner was a wholly owned subsidiary of Messe Frankfurt GmbH that was globally recognised as one of the largest organisers of trade fairs, congresses and events, while Respondent 1 (‘Netlink’) also had a long-standing presence in the Indian exhibition industry, with Respondent 3 as its Founder Director (‘Director’). Respondent 6 (‘ostensible organiser’) claimed to be the organiser of ‘Indian Gifts & Premium Show’ and ‘PPS Expo Pen, Paper & Stationer Show’ (‘impugned exhibitions’) scheduled to be held from 22-1-2026 to 24-1-2026 at the Jio World Convention Centre, Mumbai.
Messe Frankfurt entered into a strategic collaboration with Netlink for jointly conceptualizing and conducting trade exhibitions for which an APA dated 24-9-2018 was executed under which Netlink and its Director sold intellectual property (trade marks), domain names, goodwill, databases and other assets in favour of Messe Frankfurt in relation to three shows of Netlink viz., ‘Stationery and Write Show, Corporate Gifts Show and House-ware and Kitchenware show’ for approximately Rs 15.24 crore. Under Clause 6 of the APA that contained ‘non-compete and non-solicit’ clause, Netlink and its Director agreed not to carry on or engage in any business similar to or competing with the same business assets for a period of five years after the closing date. Under Clause 6.2, it was agreed that the restrictions set out in Clause 6 were material inducement and condition to Messe Frankfurt agreeing to purchase the assets from Netlink.
Due to disruptions caused by the Covid-19 pandemic, the exhibitions scheduled for 2020 and 2021 could not be held. The parties extended the performance period to include exhibitions scheduled for 2023 and 2024 and executed an amended APA, by which, Respondent 2, the then representative of Netlink for exhibitions (‘former employee’), was also named in the non-compete and non-solicit clause.
Under Clause 5.1(f) of the APA, Netlink was required to provide consultation and cooperation services for exhibitions from 2019 to 2022 and duly rendered these services. Netlink and its Director exited in 2024 and were consequently bound by a non-compete restriction till 2029. Messe Frankfurt thereafter learnt, through market interactions, that the former employee orchestrated attempts to breach the APA and its amendment. Accordingly, Messe Frankfurt engaged IIRIS Consulting Services Pvt. Ltd. (‘IIRIS’), which submitted its report dated 4-12-2025. Messe Frankfurt alleged that the impugned exhibitions were being conducted by Netlink, its Director, and the former employee in connivance with Respondents 4 to 6 which was violative of the non-compete clause. He then filed the present petition under Section 9 of the A&C Act seeking the following interim relief:
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injunction restraining holding/organising/participating in the two exhibitions;
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deposit of Rs 2.5 crore towards damages, expenses and opportunity loss; and
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disclosures on involvement and association.
Messe Frankfurt’s counsel highlighted that the ‘non-compete and non-solicit’ covenants operated between 3-1-2024 till 29-5-2029, and that the amended APA made the covenant applicable to the former employee as well. He relied on the IIRIS report, emails, photographs from a September 2025 exhibition, WhatsApp communications, and a transcript of a call recordings with a business associate. He further alleged that the ostensible organiser had no expertise to organise a show of that magnitude.
On the other hand, Netlink and its Founding Director characterised the petition as an illusion of cause of action and pointed out the gross delay by Messe Frankfurt in bringing in the petition. They accused Messe Frankfurt of suppressing an email wherein Messe Frankfurt rejected the Director’s request to employ the former employee. Further, the former employee argued that he was not a signatory to the APA or the amended APA and thus was not bound by the non-compete clause, and that his presence at an exhibition or forwarding information did not make him an organiser. The ostensible organiser submitted that it had informed Messe Frankfurt about the silver jubilee exhibition in January 2025 and had widely advertised the event. It contended that since it was a third party to the arbitration agreement, no reliefs could be directed against a non-signatory. Similarly, Respondent 5 also denied any nexus with the APA.
Analysis and Decision:
The Court noted that Messe Frankfurt filed the present petition after substantial delay. Though the exhibitions are scheduled to be held in January 2026, Messe Frankfurt admitted acquisition of knowledge about the exhibitions in January 2025 and that he knew that the former employee was playing direct and substantial role in organising the impugned exhibitions. The Court opined that the petition was filed at the last minute to create false urgency around the IIRIS report obtained not at Messe Frankfurt’s behest but that of an advocate. The Court observed that Messe Frankfurt had failed to move with necessary alacrity, and consequently he did not deserve any equitable relief.
The Court noted that in the email dated 28-3-2024, Messe Frankfurt said it would run the show without the former employee, was prepared to take the hit of 1500 sqm, and would use alternative marketing strategies. The Court opined that the email negated the narrative of any nefarious designs by Netlink and its Director of doing business clandestinely through the former employee. The Court observed that the non-disclosure was another factor disentitling Messe Frankfurt to equitable relief under Section 9 of the A&C Act.
The Court opined that as the former employee was in the industry for several decades, thus a mere visit to an exhibition or his being spotted around the concerned booth could not be a ground for inferring he was associated with the impugned exhibitions. Messe Frankfurt had relied on a call transcript between the former employee and a business associate of Messe Frankfurt which was referenced in the pleadings but not filed with the petition or rejoinder, but the Court observed that since the former employee did not get the opportunity contend the transcript, it could not be relied on to infer that the impugned exhibitions were being organised by the former employee.
The Court opined that the former employee was not prima facie bound by the ‘non-compete’ covenant as he was not a signatory to the APA or amended APA, and by entering into contract with the third party, his employer could not restrict him from taking up competing assignment after resignation. If the contractual covenant of ‘non-compete and non-solicit’ was given effect, the former employee would be left unemployed and idle for 5 years. The Court noted that though Netlink received valuable consideration for sale of business and assets for agreeing to the non-compete clause, the former employee did not get any consideration. The Court relied on VFS Global Services (P) Ltd. v. Suprit Roy, 2007 SCC OnLine Bom 1083, wherein distinction was drawn between restrictive condition in contract of employment which was operative ‘during’ the period of employment and the one which was to operate ‘after’ the termination of employment, and it was held that the condition which operates ‘after’ the term of employment is in restraint of trade under Section 27 of the Contract Act, 1872 (‘Contract Act’).
The Court observed that the in the present case, the restrictive covenant was outside the former employee’s contract of employment. The non-compete or non-solicit restriction did not operate between employer and employee, but sought to operate between purchaser of the business and the employee, who had not even signed the document containing such restrictive covenant. The Court concluded that the non-compete and non-solicit covenants in the APA and amended APA did not bind the former employee.
The Court also rejected Messe Frankfurt’s contention that the impugned exhibits were being organised by Respondents 1 to 3 as he failed to establish the association between the ostensible organiser and these respondents. Thus, the Court held that there was no prima facie case that Netlink or its Director breached the covenants of the APA or the amended APA or that they had taken any direct or indirect part in organisation of the impugned exhibitions.
The Court emphasised that interim measures under Section 9 of the A&C Act can be made inter alia to preserve the subject matter of arbitration. The Court opined that it was for the Arbitral Tribunal to decide whether the impugned exhibitions could be made the subject matter of the proposed arbitration between Messe Frankfurt and Netlink. The Court referred to Gatx India (P) Ld. v. Arshiya Rail Infrastructure Ltd., 2014 SCC OnLine Del 4181, wherein it was held that exercise of power under Section 9 of the A&C Act for granting interim relief against a party to arbitration agreement which incidentally affects a third party is ordinarily acceptable. However, when order made under Section 9 is wholly directed against a third party, the power must be exercised sparingly. Therefore, the Court observed that the power could not be exercised against the ostensible organiser who was not a party to the arbitration agreement. The Court opined that it was difficult to treat the impugned exhibitions as the subject matter of the arbitration in the hands of the ostensible organiser, and that overstretching Section 9 to rope in a non-signatory organiser was unwarranted on the present facts.
The Court also noted that it could not trace any clandestine or fraudulent activities by Netlink and its Director in organising the impugned exhibitions for the ostensible organiser, and therefore it was unnecessary to undertake the exercise of lifting the corporate veil or applying the group of companies doctrine to find out whether any person in the management of Respondents 4 to 6 had any association with Netlink or its Director. The Court relied on Cox & Kings Ltd. v. SAP India (P) Ltd., (2024) 4 SCC 1, where it was clarified that mere presence of commercial relationship between signatory and non-signatory parties is not sufficient to infer legal relationship between the parties and that the group of companies doctrine cannot be applied to abrogate party consent and autonomy.
The Court further observed that Messe Frankfurt had already sought damages and it could press its claims before the Arbitral Tribunal against the signatories seeking impleadment of other respondents as per law, and thus, Messe Frankfurt was not remediless, and damages constituted an adequate remedy.
Considering the overall conspectus, including delay, inadequate prima facie proof of connivance, the nonbinding nature of the covenant vis-à-vis the non-signatory former employee under Section 27 of the Contract Act, and the third-party status of the ostensible organiser, the Court dismissed the petition for interim measures clarifying that Messe Frankfurt can claim damages against respondents in the arbitration.
[Messse Frankfurt Trade Fairs India (P) Ltd. v. Netlink Solutions (India) Ltd., Commercial Arbitration Petition (L) No. 40115 of 2025, decided on 21-1-2026]
Advocates who appeared in this case:
For the Petitioner: Navroz Seervai, Senior Advocate with Sharan Jagtiani, Senior Advocate, Pradeep Bakhru, Piyush Kranti & Aishwarya Patwa i/b Wadia Ghandy & Co.
For the Respondents: Ashish Kamat, Senior Advocate with Shrey Fatterpekar i/b Bankim Gangar, Shanay Shah i/b Drasti Jani, Vishal Kanade with Pranav Nair & Omkar Khanvilkar, Rashmin Khandekar with Kartik Gantha & Rishabh Shah, Advocates.
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