Bombay High Court
Sarla Advantech Private Limited vs Anil Mehta on 21 July, 2026
Author: Amit Borkar
Bench: Amit Borkar
CNR No : HCBM020166682025
arbp611-2025 with ial18920-2026.doc
AGK
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.611 OF 2025
WITH
COURT RECEIVER REPORT NO.342 OF 2025
Sarla Advantech Private Limited ... Petitioner
Vs.
1. Anil Mehta
2. Navneet Khanolkar
3. Sushma Telang
4. Amogh Kulkarni
ATUL 5. Hardik Shanishchara
GANESH
KULKARNI 6. Ganraj Bhagat
Digitally signed by
ATUL GANESH 7. Sibin Philip
KULKARNI
Date: 2026.07.21
15:00:06 +0530
8. Percivon Technologies Pvt. Ltd.
9. Angamalay Greenige George ... Respondents
WITH
INTERIM APPLICATION (L) NO.18920 OF 2026
IN
ARBITRATION PETITION NO.611 OF 2025
Anil Mehta ... Applicant
In the matter between
Sarla Advantech Private Limited ... Petitioner
V/s.
Anil Mehta & Others ... Respondents
Mr. Aadil Parsurampuria with Rushil Mathur, Yash
Pitroda, Amrita Natarajan and Mayur Setty i/by
Kochhar & Co. for the petitioner.
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Mr. Karl Tamboly with Ryan D'Souza, Vikrantsingh
Negi, Ekta Tyagi, Priyamvada Singhania, Sneha
Barange, Aishwarya Pawar, and Shreedhar Joshi i/by
DSK Legal for respondent No.1.
Mr. Swayam S. Chopda, O.S.D., from the Office of
Court Receiver, is present.
CORAM : AMIT BORKAR, J.
RESERVED ON : JULY 16, 2026.
PRONOUNCED ON : JULY 21, 2026
JUDGMENT:
1. By this petition filed under Section 9 of the Arbitration and
Conciliation Act, 1996, the petitioner has asked for different
interim ex parte reliefs against respondent Nos.1 and 8. The
petitioner says that the respondents are wrongly using and
disclosing its confidential and proprietary information and are also
approaching its clients and employees in breach of their
contractual obligations. According to the petitioner, these acts are
causing serious and irreparable loss to its business. It has therefore
prayed that the respondents be restrained from doing so till the
arbitration proceedings are finally decided, the arbitral award is
made, and the award is fully enforced.
2. According to the petitioner, the facts leading to the present
petition are as follows. Respondent No.1 was working with Parekh
Marketing Limited and his service conditions were governed by his
appointment letter dated 20 August 1998. On 6 July 2017, Parekh
Marketing Limited entered into a Business Transfer Agreement
with ATS Global B.V., under which the business of Sarla
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Technologies was transferred. Thereafter, on 24 August 2017,
respondent No.1 sent an email to the employees of Sarla
Technologies informing them about the business transfer and
stating that their existing terms of employment would continue
without any change. On 1 September 2017, Sarla Technologies
was merged with the petitioner, which is a wholly owned
subsidiary of ATS Global B.V. Respondent No.1 was thereafter
appointed as the Managing Director and Chief Executive Officer of
the petitioner under a fresh Employment Agreement dated 21
September 2017. The petitioner further states that in June 2022
respondent No.2 exported company contacts from his official
laptop. It is the case of respondent No.1 that around July 2023 he
was asked by the Chairman of ATS to sign an agreement with a
back date of October 2017, but he refused. According to
respondent No.1, in August 2023 he was also forced to leave the
petitioner company after being promised a separation package of
more than Rs.2 crores. Between 3 November 2023 and 9
November 2023, emails were exchanged between Mark McCoy,
respondent No.1 and Kevin Partington regarding the formula for
the proposed separation agreement. On 22 November 2023, the
services of respondent No.1 came to be terminated. Thereafter, by
a letter dated 19 December 2023, the petitioner alleged that
respondent No.1 had misappropriated an amount of
Rs.27,77,629/-. The petitioner also stated that an audit was in
progress and, after adjusting the said amount, only Re.1 would be
payable to respondent No.1. On 11 February 2024, respondent
No.8, namely Percivon Technologies, was incorporated as a private
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limited company under the Companies Act, 2013. The petitioner
further states that on 6 May 2024 respondent No.9 forwarded
confidential information from his official email account to his
personal email account. The services of respondent No.9 came to
an end on 11 June 2024, and he joined Percivon Technologies in
February 2025. Similarly, respondent No.5 left the petitioner on 12
June 2024 and joined Percivon Technologies in July 2024.
3. According to the petitioner, in July 2024 its Information
Technology team recovered the email dated 6 May 2024, which,
according to it, shows misuse of its confidential information.
Respondent No.7 left the petitioner on 30 August 2024 and joined
Percivon Technologies in September 2024. Respondent No.6 left
the petitioner on 20 September 2024 and joined Percivon
Technologies during the same month. The petitioner also states
that respondent Nos.2, 3 and 4 had already joined Percivon
Technologies in March and April 2024. In January 2025,
respondent No.1 was appointed as Financial and Para Legal
Consultant and Advisor to respondent No.8, namely Percivon
Technologies. On 8 January 2025, one of the petitioner’s clients
informed it that respondent Nos.2 and 7 had approached the client
for projects. Thereafter, on 28 January 2025, another client of the
petitioner sent an email to Percivon Technologies making an
inquiry regarding a possible assignment. In February 2025,
respondent No.1 acquired a minority interest in Percivon
Technologies through Optional Convertible Preference Shares. On
10 February 2025, the petitioner lodged a complaint at Turbhe
Police Station against respondent No.1 and others alleging
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misappropriation of about Rs.2.5 crores. On 18 February 2025,
respondent No.9, on behalf of Percivon Technologies, shared a
presentation with one of its clients. On 20 February 2025,
respondent No.1 submitted a reply before Manpada Police Station
alleging that he was being harassed by the petitioner.
4. According to the petitioner, on 1 March 2025 one of its
clients forwarded the above presentation to it, because of which it
came to know about the alleged misuse of its information. A
complaint was thereafter registered at Turbhe Police Station on 3
March 2025. The petitioner also filed an application under Section
175(3) of the Bharatiya Nagarik Suraksha Sanhita, 2023. The said
application was rejected and was treated as a pending private
complaint. In April 2025, respondent No.1 was appointed as the
Vice Chairman of Percivon Technologies. Thereafter, on 3 June
2025, the petitioner filed the present petition under Section 9 of
the Arbitration and Conciliation Act, 1996. On 27 June 2025, this
Court passed an ex parte ad interim order restraining the
respondents from using the petitioner’s confidential information
and also appointed the Court Receiver.
5. Mr. Parsurampura, learned counsel appearing for the
petitioner, invited my attention to the Employment Agreements
dated 20 August 1998 and 21 September 2017. He submitted that
both the agreements contain a specific clause relating to
confidentiality. According to him, although the arbitration clause is
expressly found in the Employment Agreement dated 20 August
1998, the documents placed on record show that the same
arbitration clause stands incorporated into the Employment
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Agreement dated 21 September 2017. He also relied upon the
email dated 24 August 2017 sent by respondent No.1 to the
employer and other employees, wherein respondent No.1 stated
that after the business transfer the operations of Sarla
Technologies would continue as before and there would be no
change in the employees’ roles, responsibilities or service
conditions. With regard to the termination letter dated 22
November 2023, learned counsel submitted that the difference
between the termination letter produced at Exhibit “S” and the
other termination letter has been explained by the petitioner in
paragraphs 15 to 20 of the rejoinder. He pointed out that in
paragraph 16 the petitioner has stated that after noticing an error
in the first termination letter, a corrected termination letter
containing the proper contractual references was personally
handed over to respondent No.1, and he was requested to return
the earlier letter. However, respondent No.1 refused to do so. He
further submitted that since the petitioner’s representative
genuinely believed that only one termination letter existed, the
same position was conveyed before the police authorities and the
petitioner’s advocates were shown the original termination letter
relied upon by respondent No.1 during inspection of documents.
6. Learned counsel further submitted that paragraph 17 of the
rejoinder explains that even the second termination letter contains
typographical mistakes regarding the relevant employment
agreement. According to him, while referring to the service
conditions of respondent No.1, the date and reference relating to
the employment of Mrs. Sushma Telang, respondent No.3, were
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mistakenly carried forward. He submitted that there is no question
of forgery because both the termination letters admittedly
originated from the petitioner and were issued by its Chief
Executive Officer. According to him, the only difference between
the two letters is regarding the contractual references in the
opening paragraphs, whereas the decision to terminate the services
of respondent No.1 has never been disputed.
7. Inviting my attention to page 325 of the petition, learned
counsel submitted that the document contains details of Jaguar
and Land Rover projects showing commencement in March 2013
and completion in April 2015. He submitted that respondent No.8
was incorporated only on 11 February 2024 and respondent Nos.2
to 7 and 9, who were earlier employees of the petitioner, thereafter
joined respondent No.8. According to him, these respondents have
been using confidential and proprietary information collected
during their employment with the petitioner, which was developed
by the petitioner over nearly twenty-five years, for the benefit of
respondent No.8. He submitted that by using this information,
respondent No.8 has been approaching the petitioner’s clients and
offering similar services at substantially lower rates. In support of
this submission, he relied upon the email dated 8 January 2025
wherein one of the petitioner’s clients informed that respondent
Nos.2 and 7 had approached it for project work.
8. Learned counsel further submitted that respondent No.8 was
fully aware that respondent Nos.1 to 7 and 9 were allegedly using
the petitioner’s confidential and proprietary information for
expanding its business. Despite such knowledge, respondent No.8
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did not take any steps to stop such acts. On the contrary, according
to him, the conduct of respondent No.8 shows that it actively
encouraged such activities in order to gain an unfair business
advantage. He further submitted that respondent No.8 also
encouraged its employees to approach the petitioner’s employees
by offering attractive benefits with the intention of obtaining more
confidential information belonging to the petitioner. Learned
counsel submitted that during a routine data management exercise
conducted by the petitioner’s Information Technology team in July
2024, an email dated 6 May 2024 was recovered from the deleted
folder. According to him, the said email had been secretly sent by
respondent No.9 from his official email account to his personal
email account. He submitted that the email was sent after
respondent No.9 had tendered his resignation and while he was
serving the notice period. According to him, the email contained
several confidential files belonging to the petitioner, including Non
Disclosure Agreements, rate charts, supplier selection criteria,
costing sheets, estimation data and other technical information
and trade secrets developed by the petitioner over a period of time
at its registered office at Navi Mumbai.
9. Learned counsel submitted that after conducting an internal
inquiry, the petitioner addressed an email dated 4 July 2024 to
respondent No.9 questioning him regarding the alleged theft of
data during his employment. According to him, respondent No.9
thereafter sent an email dated 26 July 2024 apologising to the
petitioner for the said act. Learned counsel also invited my
attention to the email dated 6 May 2024 allegedly sent by
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respondent No.9 to his personal email account. According to him,
the email contained several files relating to the petitioner’s
business, including rate charts, JLR MLA High Queries
Assumptions, control brochures, JLR Halewood quotation matrix,
case studies relating to BIW projects and various other business
documents.
10. Learned counsel further submitted that the petitioner
requested one of its clients to make an inquiry with respondent
No.8 regarding a possible assignment. Accordingly, on 28 January
2025, the said client sent an email to respondent No.8 seeking
details regarding the proposed work. In reply, respondent No.9, on
18 February 2025, sent a company presentation along with certain
case studies. According to learned counsel, the client thereafter
forwarded the said material to the petitioner on 1 March 2025. It
was only then that the petitioner came to know that respondent
No.9 had also joined respondent No.8. He submitted that on
comparing the documents shared by respondent No.8 with the
petitioner’s confidential material, it was found that respondent
No.8 had used the petitioner’s proprietary case studies while
responding to the client. He pointed out that the petitioner has
prepared a comparison chart to demonstrate the alleged similarity
between the two sets of documents. He also submitted that
respondent Nos.2 and 7 were marked in the email correspondence
exchanged between respondent No.9 and the client, which,
according to him, further supports the allegation of unauthorised
use of the petitioner’s confidential information. He therefore
submitted that the dispute regarding the contents of the
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termination letters has no bearing on the real controversy involved
in the present petition.
11. In support of his submission that the Court should exercise
only limited jurisdiction at this stage, learned counsel relied upon
the decision of the Supreme Court in SBI General Insurance Co.
Ltd. v. Krish Spinning, reported in (2024) 12 SCC 1. Referring to
the said decision, learned counsel submitted that Section 5 of the
Arbitration and Conciliation Act has both positive and negative
aspects. According to him, while the provision permits judicial
intervention only in matters specifically provided under the Act, it
simultaneously prohibits the Courts from interfering in matters
which are exclusively entrusted to the Arbitral Tribunal.
12. Learned counsel further submitted that when Section 5 is
read together with Section 16 of the Act, it becomes clear that
issues relating to the jurisdiction of the Arbitral Tribunal must
ordinarily be decided by the Tribunal itself. According to him, at
this stage the Court is required to undertake only a prima facie
examination. Learned counsel then referred to the negative aspect
of the doctrine of competence recognised under Section 16 of the
Act.
13. According to him, Section 16 recognises the principle that
the Arbitral Tribunal has the first authority to decide questions
relating to its own jurisdiction. This principle gives effect to the
intention of the parties to resolve their disputes through
arbitration and avoids parallel proceedings before the Courts. He
submitted that the negative aspect of the doctrine is intended to
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restrict interference by the Courts at the initial stage by requiring
them to refrain from deciding questions relating to the jurisdiction
of the Arbitral Tribunal before the Tribunal itself has considered
them. Learned counsel submitted that, therefore, the Court is
required to examine only whether a prima facie arbitration
agreement exists and nothing beyond that. In support of this
submission, he relied upon paragraphs 116 and 117 of the above
judgment.
14. He further submitted that all issues relating to the arbitration
agreement and disputes arising from it fall within the exclusive
jurisdiction of the Arbitral Tribunal. According to him, the Court’s
enquiry at this stage is confined only to a prima facie examination
of the existence of the arbitration agreement, whereas all other
objections, including questions of accord and satisfaction, should
ordinarily be left for determination by the Tribunal. Learned
counsel also submitted that the Court should not undertake a
detailed examination of the merits of the dispute or decide issues
which fall within the jurisdiction of the Arbitral Tribunal, as such
an exercise would defeat the principles of arbitral autonomy and
competence. Learned counsel thereafter referred to paragraphs
122 and 123 of the judgment while explaining the extent of
judicial review available under the Arbitration Act. According to
him, although the Arbitral Tribunal is the first authority to decide
questions relating to its jurisdiction and the arbitration agreement,
its decision is not final in all respects. Such decision remains open
to judicial scrutiny at the appropriate stage under the Arbitration
and Conciliation Act.
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15. Learned counsel also submitted that even issues relating to
ex facie frivolous claims and allegations of dishonesty should
ordinarily be examined by the Arbitral Tribunal. According to him,
the Arbitral Tribunal is fully competent to appreciate the evidence
led by the parties and determine whether the claims or defences
are ex facie frivolous or dishonest.
16. Learned counsel also relied upon the decision of the
Supreme Court in Vidya Drolia v. Durga Trading Corporation,
reported in (2021) 2 SCC 1. Relying upon the said judgment, he
submitted that a detailed examination of disputed questions
should ordinarily be left to the Arbitral Tribunal. He submitted that
where a prima facie examination by the Court is insufficient or
inconclusive, the matter should be left for full consideration by the
Arbitral Tribunal. According to him, a detailed enquiry by the
Court at this stage would encroach upon the jurisdiction of the
Tribunal and would be contrary to the legislative scheme of the
Arbitration Act. Learned counsel further referred to the
observations in Vidya Drolia regarding the scope of a prima facie
examination by the Court. According to him, while Section 11 of
the Act does not prescribe any detailed standard of judicial review
for deciding the existence of an arbitration agreement, Section 8
makes it clear that the Court’s examination at the stage of
reference is only prima facie and not final. Learned counsel further
submitted that questions relating to non arbitrability should
ordinarily be decided by the Arbitral Tribunal in the first instance. .
According to him, the principles of severability and competence
require that the Arbitral Tribunal should be treated as the
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preferred first forum to decide all issues concerning non
arbitrability. Lastly, learned counsel submitted that respondent
No.1 questioned the existence of the arbitration agreement only
after nearly one year from the date of service of the present
petition and after the petitioner had already invoked arbitration
claiming an amount of Rs.11,45,00,000/- before the Arbitral
Tribunal.
17. On the other hand, Mr. Tamboly, learned counsel appearing
for respondent No.1, invited my attention to the ad interim order
dated 27 June 2025 passed by this Court. He submitted that while
passing the said order, this Court proceeded on the basis that the
employment agreement between the parties contained an
arbitration clause. However, according to him, the Employment
Agreement dated 21 September 2017 between the petitioner and
respondent No.1 does not contain any arbitration clause. He
submitted that the terms of the agreement dated 21 September
2017 are substantially different from those contained in the earlier
Employment Agreement dated 20 August 1998. According to him,
the later agreement does not specifically incorporate the terms and
conditions of the earlier agreement.
18. Learned counsel submitted that the appointment letter dated
20 August 1998 was issued on the letterhead of Parekh Group and
was signed by a Senior General Manager on behalf of Pidilite
Industries Limited. According to him, Parekh Group and the
present petitioner are separate entities. He submitted that merely
because there was a transfer of business, it cannot be presumed
that the earlier service conditions continued. He invited my
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attention to Clauses 2 and 5 of the Employment Agreement dated
20 August 1998, which provided that respondent No.1 could be
transferred from one company to another under the same
management anywhere in India. He then referred to the
Employment Agreement dated 21 September 2017, which records
that the business of Sarla Technologies was transferred pursuant to
the Business Transfer Agreement dated 6 July 2017. He submitted
that Clause 9 of the said agreement deals with the duration and
termination of employment, while Clause 12 separately deals with
dispute resolution. According to him, Clauses 12.1 and 12.2 only
require the parties to make efforts to resolve disputes in
accordance with the company’s policies and also reserve the
petitioner’s right to seek an injunction in case of breach by the
employee.
19. Learned counsel submitted that a plain reading of Clauses
12.1 and 12.2 shows that while the parties have provided a
mechanism for dispute resolution, they have consciously omitted
to include any arbitration clause. According to him, such an
omission cannot be supplied by implication. He therefore
submitted that the petitioner was fully aware that the Employment
Agreement dated 21 September 2017 did not contain an
arbitration clause. Despite this, the petitioner represented before
this Court that such a clause existed and obtained an ad interim
order. According to him, the petitioner, having made a false
statement on this material aspect, is not entitled to any
discretionary relief under Section 9 of the Arbitration and
Conciliation Act, 1996.
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20. Learned counsel further submitted that respondent No.1 was
employed with Parekh Marketing Limited from 20 August 1998
and his service conditions were governed by the Employment
Agreement of that date. During his employment, respondent No.1
was in charge of the business activities of Sarla Technologies,
which was one of the business divisions of Parekh Marketing
Limited. He submitted that after the business transfer, Sarla
Technologies was merged with the petitioner on 1 September
2017, which is a wholly owned subsidiary of ATS Global B.V.
According to him, upon such transfer, the employment of
respondent No.1 with Parekh Marketing Limited came to an end
and the Employment Agreement of 1998 also stood terminated.
21. Learned counsel submitted that thereafter respondent No.1
was appointed as the Managing Director and Chief Executive
Officer of the petitioner under a fresh Employment Agreement
dated 21 September 2017. According to him, this agreement does
not contain any arbitration clause and also does not incorporate by
reference any other agreement containing such a clause. He
further submitted that although the petitioner is a separate legal
entity, it was completely controlled by ATS Global B.V. and its
representatives, including Kevin Partington and Deborah Pritchard,
exercised complete control over the petitioner’s affairs, including
decisions of the Board, finances, inter-company fund transfers,
audits and legal matters. According to him, when respondent No.1
noticed certain financial irregularities and issues relating to
corporate governance, he repeatedly raised those concerns with
the petitioner, ATS Global B.V. and their senior officials.
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22. Learned counsel submitted that around July 2023 the
Chairman of ATS Global B.V. asked respondent No.1 to sign an
agreement between the petitioner and ATS Global B.V. by giving it
a back date of October 2017. According to him, the proposed
agreement was beneficial to ATS Global B.V. but prejudicial to the
petitioner. He submitted that respondent No.1 refused to sign the
agreement in discharge of his fiduciary duties as the Managing
Director and Chief Executive Officer of the petitioner. According to
him, because of this refusal and because respondent No.1
continued to point out what he considered to be unethical and
illegal conduct, he was ultimately removed from the company.
23. Learned counsel further submitted that in August 2023
respondent No.1 was compelled to leave the petitioner’s
employment. According to him, to secure his early exit, the
petitioner and ATS Global B.V. assured respondent No.1 that he
would be paid ten months’ gross salary, bonus for the financial
year 2023 to 2024 and other contractual and statutory dues
aggregating to more than Rs.2 crores as a separation package. He
submitted that the employment was thereafter terminated without
assigning any reason by the letter dated 22 November 2023 under
Clause 9 of the Employment Agreement. According to him, it was
only later, by letter dated 19 December 2023, that the petitioner
for the first time alleged misappropriation of funds by respondent
No.1 and stated that an external audit and investigation were in
progress in relation to an alleged amount of Rs.27,77,629/-.
24. Learned counsel submitted that although the petitioner took
no action for about fourteen months, it again started taking action
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against respondent No.1 immediately after he became associated
with Percivon Technologies. According to him, the petitioner
lodged a complaint before Turbhe Police Station on 3 March 2025
alleging misappropriation of funds. He submitted that the
investigating agency treated the matter as civil in nature and
closed the complaint. Thereafter, the petitioner filed an application
under Section 175(3) of the Bharatiya Nagarik Suraksha Sanhita,
2023 before the Magistrate at Belapur. According to him, the said
application was rejected and converted into a private complaint
under Section 223 of the said Code, on which no cognizance has
yet been taken. He submitted that these parallel civil and criminal
proceedings on the same allegations clearly show a mala fide
intention to harass respondent No.1.
25. Learned counsel further submitted that thereafter the
petitioner filed the present petition under Section 9 of the
Arbitration and Conciliation Act and obtained an ad interim order.
According to him, since the Employment Agreement did not
contain any arbitration clause, the petitioner produced a forged
and fabricated termination letter dated 22 November 2023 before
this Court instead of the original termination letter issued to
respondent No.1. He submitted that this alleged fabricated letter
referred to certain non-existent employment terms dated 31
August 2017 and 3 September 1999, which, according to him, had
no connection with the employment of respondent No.1.
26. Learned counsel submitted that by relying upon the alleged
fabricated termination letter and by suppressing the original
termination letter, the petitioner misled this Court into passing the
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ex parte order dated 27 June 2025. According to him, by the said
order this Court restrained the respondents, including respondent
No.1, from using the petitioner’s alleged confidential and
proprietary information and also appointed a Court Receiver with
wide powers to enter the premises of respondent Nos.1 to 9,
conduct searches, seize electronic devices and take mirror images
of electronic data, including from the residential premises of
respondent No.1. He therefore submitted that the present petition
is misconceived, is not maintainable either in law or on facts and
deserves to be dismissed.
27. In support of his submission that an arbitration clause cannot
be incorporated into a subsequent agreement merely by reference
and that there must be a clear and specific incorporation of such a
clause, learned counsel relied upon the decisions of the Supreme
Court in MR Engineers & Contractors Pvt. Ltd. v. Som Datt Builders
Ltd., (2009) 7 SCC 696, NBCC (India) Ltd. v. Zillion Infraprojects
Pvt. Ltd., (2024) 7 SCC 174, Elite Engineering & Construction
(Hyderabad) Pvt. Ltd. v. Techtrans Construction India Pvt. Ltd.,
(2018) 4 SCC 281 and Young Achievers v. IMS Learning Resources
Pvt. Ltd., (2013) 10 SCC 535.
28. In support of his submission that interim relief under Section
9 can be refused or vacated if the petitioner fails to make out a
prima facie case regarding the existence of an arbitration
agreement, learned counsel relied upon the decisions in Rajia
Begum v. Barnali Mukherjee, 2026 INSC 106 and Sundaram
Finance Ltd. v. NEPC India Ltd., (1999) 2 SCC 479.
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29. In support of his submission that a party approaching the
Court without clean hands is not entitled to equitable or
discretionary relief, learned counsel relied upon the decisions in
Tomorrowland Ltd. v. Housing & Urban Development Corporation
Ltd., (2025) 4 SCC 19, Dalip Singh v. State of U.P., (2010) 2 SCC
114 and Chandra Shashi v. Anil Kumar Verma, (1995) 1 SCC 421.
30. Learned counsel further submitted that a party seeking ex
parte interim relief has a greater duty to disclose all material facts
and relevant documents to the Court. In support of this
submission, he relied upon the decisions in Lallubhai Amichand
Ltd. v. Absolink Enterprises Pvt. Ltd. & Ors., Interim Application
(L) No.8399 of 2023 in Suit (L) No.8396 of 2023 decided on 3
July 2023 and Kewal Ashokbhai Vassoya v. Suarabhakti Goods Pvt.
Ltd., 2022 SCC OnLine Bom 3335.
31. In support of his submission that a fact can be treated as
proved on the basis of the test of preponderance of probabilities,
learned counsel relied upon the decision of the Supreme Court in
Dr. N.G. Dastane v. S. Dastane, (1975) 2 SCC 326 : 1975 SCC
OnLine SC 122.
REASONS AND ANALYSIS:
32. I have carefully gone through the rival submissions,
pleadings, documents produced by both sides and the judgments
relied upon by the learned advocates. I have looked into the
Employment Terms dated 20 August 1998 and the Employment
Agreement dated 21 September 2017 placed on record. At this
stage, this Court is not required to finally decide whether the
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Arbitral Tribunal has jurisdiction. Even so, before any relief under
Section 9 of the Arbitration and Conciliation Act, 1996 is granted,
this Court has first to satisfy, at least prima facie, that there exists a
valid arbitration agreement covering the present dispute. If such
prima facie satisfaction is not reached, jurisdiction under Section 9
itself cannot be exercised.
33. Respondent No.1 has raised an objection that the
Employment Agreement dated 21 September 2017 does not
contain any arbitration clause. According to him, after transfer of
the business, a fresh employment contract came into existence and
the earlier Employment Terms dated 20 August 1998 stood
replaced. It is his case that once the earlier contract came to an
end, the arbitration clause forming part of that contract came to an
end. On this basis, he submits that the present petition is not
maintainable.
34. The petitioner has disputed this objection. According to the
petitioner, transfer of Sarla Technologies did not bring respondent
No.1’s employment to an end. It is submitted that only the
employer changed because of transfer of the undertaking, whereas
the employment continued without any interruption. Reliance has
been placed upon the email dated 24 August 2017 sent by
respondent No.1 himself to all employees, wherein he stated that
business operations would continue in the usual manner and there
would be no change in their role, responsibility or employment
terms. According to the petitioner, when service conditions
continued without change, the arbitration clause also continued
though it was not again reproduced in the later agreement.
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35. Therefore, real controversy is whether the parties intended
to substitute the earlier employment contract or whether they
merely continued the existing employment under another
company after transfer of the business. This question cannot be
answered by reading one clause in isolation. Both agreements, the
surrounding circumstances and the conduct of the parties are
required to be considered together before arriving at any prima
facie conclusion.
36. On reading the Employment Terms dated 20 August 1998, it
appears that respondent No.1 was appointed under the Parekh
Group. The said terms contain conditions regarding confidentiality,
transfer from one company to another under the same
management, disciplinary matters and other service conditions.
More importantly, Clause 21 provides that disputes arising out of
or relating to the contract shall be referred to arbitration under the
Rules of the Indian Merchants’ Chamber. Therefore, there is no
dispute before this Court that the Employment Terms dated 20
August 1998 contain a valid arbitration agreement.
37. It is not disputed that thereafter a Business Transfer
Agreement dated 6 July 2017 came into existence under which the
undertaking known as Sarla Technologies stood transferred. The
Employment Agreement dated 21 September 2017 records this
position. It states that because of the Business Transfer Agreement
executed between Parekh Marketing Limited, ATS Global B.V. and
the petitioner, the undertaking stood transferred to the petitioner
and respondent No.1 thereafter came to be appointed as Managing
Director and Chief Executive Officer of the petitioner. Thus, the
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later agreement indicates that appointment of respondent No.1
was connected with transfer of the existing undertaking and was
not because of independent recruitment.
38. One more provision in the Employment Agreement dated 21
September 2017 appears significant. Clause 2.2 records that leave
balance, provident fund balance, insurance cover and other
accrued benefits standing with Parekh Marketing Limited would
stand transferred to the petitioner. It further provides that
respondent No.1’s date of joining would continue to remain 1
August 1998 for the purpose of calculating continuous service and
all service benefits, including gratuity. Therefore, respondent No.1
was not treated as a fresh employee from September 2017. On the
contrary, continuity of service from the year 1998 was specifically
preserved.
39. Prima facie, Clause 2.2 weakens the submission of
respondent No.1 that the earlier contract came to an end after
execution of the later agreement. If the parties had intended to
wipe out all earlier rights and obligations, there would be no
reason to preserve continuity of service from 1998. Carrying
forward the original date of joining, provident fund, gratuity and
other service benefits prima facie indicates that the parties
themselves treated the employment as continuing though the
employer had changed because of transfer of the undertaking.
40. Respondent No.1 submitted that such continuity was
maintained for limited statutory and financial benefits. According
to him, the parties executed a fresh Employment Agreement
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containing new terms and conditions. He submits that once a
complete agreement was executed dealing separately with
duration of employment, termination, confidentiality, non compete
obligations, non solicitation obligations, dispute resolution and
jurisdiction, the earlier agreement stood replaced.
41. Prima facie, this submission cannot be lightly brushed aside.
The Employment Agreement dated 21 September 2017 contains
detailed provisions relating to confidentiality, intellectual property
rights, non compete obligations, non solicitation obligations,
duration of employment and termination. These provisions appear
more elaborate than those contained in the earlier Employment
Terms. Therefore, respondent No.1 is justified to the extent that
the parties executed a fresh document governing various aspects of
employment. However, mere execution of a fresh document is not
decisive. Law recognizes a distinction between execution of
another agreement and complete substitution of the earlier
contract. Every subsequent agreement does not wipe out all earlier
contractual obligations. Whether complete substitution has taken
place depends upon the intention of the parties gathered from the
entire transaction. Therefore, merely because the Employment
Agreement dated 21 September 2017 was executed, it cannot
follow that the arbitration clause contained in the earlier contract
also came to an end.
42. Respondent No.1 placed emphasis upon Clause 12 of the
Employment Agreement dated 21 September 2017. According to
him, Clause 12 deals with dispute resolution but omits any
arbitration clause. It only provides that the parties should first
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attempt to resolve disputes according to the company policy and
reserves liberty to the company to seek injunction in case of
breach. According to respondent No.1, omission of arbitration was
conscious and, therefore, the parties gave up arbitration.
43. This submission deserves careful consideration. Prima facie,
Clause 12 does not contain any arbitration clause. It also does not
make any reference to the arbitration clause contained in the
earlier Employment Terms. If Clause 12 alone is considered, the
submission advanced by respondent No.1 appears to carry some
force. However, what Clause 12 does not provide is important. It
nowhere states that the arbitration agreement contained in the
earlier employment arrangement stands cancelled, revoked or
replaced. It also does not declare that all previous agreements
stand extinguished. It merely provides one method of resolving
disputes and reserves liberty to seek injunction. Mere absence of
an arbitration clause may not amount to express exclusion of
arbitration. Whether such silence was intended to abandon
arbitration is a matter which would require fuller evidence
regarding the intention of the parties.
44. The petitioner has also relied upon the email dated 24
August 2017 sent by respondent No.1 himself. According to the
petitioner, respondent No.1 informed all employees that after
transfer of business there would be no change in their role,
responsibility, or employment terms. At this stage, existence of this
communication is not disputed. Though respondent No.1 may
explain the circumstances in which the email was issued, prima
facie the said document supports the petitioner’s contention that
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continuity and not complete replacement was represented to the
employees at the relevant time.
45. One more aspect also deserves notice. Obligations relating to
confidentiality, protection of intellectual property, restriction on
soliciting employees and clients, and protection of proprietary
information appear in both employment arrangements though the
language used is different. In the later agreement these obligations
have been stated in detail. Prima facie, this indicates continuation
of the same business interests sought to be protected rather than
creation of a fresh employment relationship.
46. Learned counsel for respondent No.1 relied upon the
judgments in M.R. Engineers, NBCC, Elite Engineering and Young
Achievers to contend that an arbitration clause cannot be imported
into another agreement merely by implication. There can be no
dispute regarding the principle laid down in those judgments. An
arbitration clause cannot be brought into another contract by a
vague or general reference. There must be a clear intention of the
parties showing incorporation of such clause. However, prima facie
those judgments appear to arise on different facts. In the present
case, the petitioner is not relying only upon a eference to the
earlier agreement. Its case is that the employment continued after
transfer of the undertaking. It has also relied upon continuity of
service, continuation of service benefits and the email issued by
respondent No.1 himself. Therefore, the controversy before this
Court is wider than mere incorporation by reference. The Court is
required to examine whether the earlier employment relationship
continued notwithstanding execution of the later agreement.
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47. Respondent No.1 submitted that while obtaining the ex parte
order the petitioner produced a fabricated termination letter and,
therefore, did not approach the Court with clean hands. Much
emphasis has been placed upon the difference between the two
termination letters. Prima facie, this Court is not in a position to
record such a serious finding at this stage. The petitioner has
explained in the rejoinder that the first termination letter
contained certain mistakes and, therefore, a revised letter came to
be issued. The petitioner has further stated that even the revised
letter contains typographical mistakes. Whether this explanation is
correct or otherwise cannot finally be decided only on affidavit
evidence. Allegation of fabrication is a serious allegation carrying
civil as well as criminal consequences. Such finding cannot be
recorded without proper evidence and full trial.
48. At present, what remains undisputed is that respondent
No.1’s employment came to an end on 22 November 2023. The
dispute regarding contractual references appearing in the two
termination letters may have some bearing while deciding the
rights of the parties. However, it is not sufficient to hold that there
never existed any arbitration agreement or that this Court lacks
jurisdiction to entertain the present petition.
49. Respondent No.1 also argued that the petitioner obtained the
ex parte order by suppressing material facts and therefore should
not receive discretionary relief. It is true that a party seeking ex
parte relief is expected to disclose all material facts fairly before
the Court. Deliberate suppression of material facts may disentitle
such party from equitable relief. However, before recording such
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finding, the Court must first reach a conclusion that suppression
was related to a material fact. On the present record, such
conclusion cannot be reached. The explanation offered by the
petitioner regarding both termination letters cannot be rejected at
this stage.
50. On overall consideration of the material available, this Court
finds that respondent No.1 has raised substantial questions
regarding absence of an arbitration clause in the Employment
Agreement dated 21 September 2017. These objections cannot be
described as frivolous. At the same time, the petitioner has
produced contemporaneous documents showing continuity of
employment from 1998, continuity of service benefits, continuity
of business and the representation made by respondent No.1
himself after transfer of the undertaking. When all these
circumstances are considered together, they prima facie support
the petitioner’s case that the earlier relationship was not brought
to an end.
51. Therefore, after considering both agreements as a whole, this
Court is prima facie not inclined to accept the submission of
respondent No.1 that the Employment Agreement dated 21
September 2017 replaced the earlier employment arrangement in
every respect. At the same time, this Court is also not recording
any final finding that the arbitration clause has survived. That
issue would require fuller examination by the Arbitral Tribunal
under Section 16. However, for the limited purpose of Section 9,
the petitioner has produced sufficient material to show, prima
facie, that the arbitration agreement contained in the Employment
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Terms dated 20 August 1998 continues to operate in relation to
the present dispute arising out of the continuing employment
relationship.
52. Accordingly, the preliminary objection regarding
maintainability of the present petition cannot be accepted at this
stage. This Court records a tentative and prima facie finding that
an arbitration agreement governing the present dispute is shown
to exist. This finding is recorded only for deciding the present
petition under Section 9. It shall neither bind the Arbitral Tribunal
while deciding its jurisdiction under Section 16 nor prejudice the
rights and contentions of either party in the arbitral proceedings or
in any other proceedings.
53. In view of the foregoing discussion, and upon overall
assessment of the material record, the following order is passed:
i) The preliminary objection raised by respondent No.1
regarding maintainability of the present petition is rejected.
It is held, prima facie, that the petitioner has established the
existence of an arbitration agreement sufficient for
invocation of jurisdiction under Section 9 of the Arbitration
and Conciliation Act, 1996. This finding is purely tentative
and shall not bind the Arbitral Tribunal while deciding any
application under Section 16 of the Arbitration and
Conciliation Act, 1996;
(ii) Pending commencement and final disposal of the
arbitral proceedings, making of the arbitral award and its
enforcement, respondent Nos.1 and 8, their directors,
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partners, servants, agents, employees and all persons
claiming through or under them are restrained from
disclosing, copying, using, reproducing, transmitting,
exploiting, parting with possession of, or permitting any
third party to use the petitioner’s confidential and
proprietary information, including the information described
in Exhibits “N” and “O” to the petition or any part thereof,
whether stored in electronic form or in physical form;
(iii) Pending the arbitral proceedings, respondent Nos.1
and 8 are further restrained from carrying on or continuing
any business activity by using the petitioner’s confidential
and proprietary information or trade secrets;
(iv) The Court Receiver, High Court, Bombay, appointed
under the ad interim order dated 27 June 2025, shall
continue as Receiver with the powers already granted under
the said order. The Receiver shall remain in symbolic
possession of the electronic devices, documents, and
materials already inventoried and shall continue to preserve
the mirror images and electronic data secured pursuant to
the earlier order;
(v) The Court Receiver shall not disclose, permit inspection
of, or part with the mirror images, electronic data or seized
material to either party except with further orders of the
Arbitral Tribunal or this Court;
(vi) Respondent Nos.1 and 8 shall preserve all electronic
devices, servers, cloud storage, email repositories, hard disks,
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pen drives, mobile phones and other digital storage media
containing information relating to the petitioner’s business
and shall not delete, alter, erase, encrypt or destroy any data
stored therein till further orders of the Arbitral Tribunal;
(vii) Respondent Nos.1 and 8 shall file, within four weeks,
an affidavit disclosing all electronic devices and storage
media presently in their possession containing any data or
information belonging to the petitioner and also disclose
whether any copy thereof has been transferred to any third
party;
(viii) Respondent Nos.1 and 8 shall render, within six weeks,
a statement disclosing the projects, if any, executed by using
the petitioner’s confidential or proprietary information,
without prejudice to their rights and contentions that no
such use has taken place;
(ix) Prayer seeking deposit of alleged profits earned by
respondent Nos.1 and 8 is kept open to be considered by the
learned Arbitral Tribunal upon evidence being led and is not
granted at this interlocutory stage;
(x) Prayer seeking a blanket restraint against respondent
Nos.1 and 8 from dealing with or alienating all their assets is
rejected at this stage, there being no prima facie material to
show any immediate attempt to defeat a future award;
(xi) The observations made in this order are only prima
facie in nature and confined to adjudication of the present
petition under Section 9. Neither the learned Arbitral
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Tribunal nor any Court dealing with subsequent proceedings
shall be influenced by these observations while deciding the
disputes on merits;
(xii) The parties are at liberty to apply before the learned
Arbitral Tribunal for modification, variation, continuation, or
vacation of the interim measures granted herein after
constitution of the Tribunal;
(xiii) Arbitration Petition is partly allowed in the aforesaid
terms.
(xiv) There shall be no order as to costs.
(xv) All pending interlocutory application(s) stand disposed
of in terms of this order.
(AMIT BORKAR, J.)
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