The Delhi High Court has refused to grant interim relief to DreamFolks Services Ltd. (“Petitioner”) against Encalm Hospitality Pvt. Ltd. (“Respondent”). This case stemmed from a dispute over airport lounge access services and a petition was filed under Section 9 of the Arbitration and Conciliation Act, 1996 (“Act”), seeking injunctive relief.
Justice Amit Bansal, held that no prima facie breach of the negative covenant in the agreement was made out and that any remedy for wrongful termination would lie in monetary damages and compensation, and not in injunctive relief.
The petitioner, a travel and lifestyle services aggregator for banks like ICICI, Axis, Yes Bank, and American Express, had a five-year agreement with the respondent to provide lounge access via its POS system. In August 2025, the respondent issued a 90-day termination notice but allegedly began servicing the banks directly or through third parties during this period, violating the restrictive covenant.
The petitioner argued that the covenant remained binding during notice and cited Global Music Junction v. Shatrughan Kumar[1] to support the enforcement of negative covenants. The respondent, however, countered that the agreement was non-exclusive, banks had parallel arrangements, and dealings were only through independent third parties, not its representatives.
The Court accepted Respondent’s defence, noting that the agreement neither listed Petitioner’ clients nor established exclusivity. Independent service providers could not be equated with Respondent’s representatives, and unlike in Global Music Junction[2], the present agreement was determinable with a termination clause. Justice Bansal held that even if termination was unlawful, the contractual remedy was compensation and not injunctive relief. Accordingly, the petition was dismissed.
Appearances
Petitioners: Mr. Amit Sibal, Senior Advocate, Mr. Pavan Narang, Senior Advocate with Mr. Mayank Bhargava, Mr. Abhishek Batra, Vinamra Kopahira, Mr. Ankit Handa, Ms. Suditi Batra, Mr. Rajdeep Saraf and Mr. Himanshu Sethi, Advocates.
Respondents: Mr. Rajiv Nayar, Senior Advocate with Mr. Anirudh Bakhru, Mr. N.S. Ahluwalia, Mr. Deepak Chawla, Mr. Adhish Sharma and Mr. Nitin Pandey, Advocates.
[1] 2023 SCC OnLine Del 5479
[2] Supra
