Vadilal Ice Cream Legal Battle: Mumbai vs Ahmedabad Branches, ETRetail

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Punes oldest ice cream shop began as a pharmacy

Mumbai: A three-decade-old family settlement that divided control of the Vadilal ice cream brand between the Mumbai and Ahmedabad branches of the Gandhi family has become the subject of a fresh legal dispute.

The Mumbai branch has approached the Bombay High Court, seeking to restrain the Ahmedabad branch from interfering with the manufacture, sale, distribution and marketing of ice-creams and juices that it claims it is entitled to sell under the 1993 family settlement.

Mumbai arm moves HC seeking to restrain Ahd branch from obstructing sales of ice-cream, juices

In a petition filed under Section 9 of the Arbitration and Conciliation Act, Shailesh Gandhi-led Vadilal Dairy International (VDIL) has sought interim relief restraining members of the Ahmedabad branch, Vadilal Industries and their affiliates from directly or indirectly interfering with its manufacture, sale, distribution and marketing of ice-creams and juices under the Vadilal brand.

Justice Amit Borkar reserved the order on Wednesday after hearing all parties.

Senior advocate Mustafa Doctor, appearing for the Mumbai branch with counsel Hiren Kamod, argued that the Ahmedabad branch intended to buy out the Mumbai group but had refused to complete the transaction, resulting in multiple disputes across judicial forums.

The Mumbai branch said the 1993 family settlement granted it perpetual and irrevocable rights to use the Vadilal brand for ice-creams and juices in Maharashtra, Goa, Karnataka, Kerala and undivided Andhra Pradesh in exchange for relinquishing its shareholding in the group’s trademark-holding company.

Through its lawyers, the Mumbai branch also alleged that the respondents had launched a series of actions to undermine its business, including trademark litigation in the US, quality-related allegations, demands for product recalls and attempts to inspect its factories.

Appearing for the Ahmedabad branch, senior counsel Venkatesh Dhond, along with Shalaka Patil of Trilegal, argued that products manufactured by VDIL had consistently shown severe microbiological contamination, putting the company in breach of the quality control provisions of the registered user agreement. The agreement was signed in 1992 when the family businesses were split between the Mumbai and Ahmedabad branches.

Senior counsel Shiraz Rustomjee, appearing for Vadilal International, challenged the maintainability of the petition on jurisdictional grounds, arguing that the parties had agreed that disputes would fall within the jurisdiction of the district court in Ahmedabad.

Representing Vadilal Industries, senior counsel Zal Andhyarujina and Ativ Patel of AVP Partners argued that the company was publicly listed and that retail shareholders hold a 35% stake.

“We have been made a party in the case, whereas we are not a party or signatory in any agreement between family members,” argued Andhyarujina. “We are just a licensee (of Vadilal International) that owns the brand ‘Vadilal’.”

The Mumbai branch also argued that representatives of the Ahmedabad group had explored acquiring its business after resolving internal disputes and consolidating businesses under Vadilal Industries. After settlement discussions failed, the Mumbai branch invoked arbitration under the dispute resolution clause of the 1993 family settlement. It is seeking interim relief until the arbitral tribunal delivers its final award.