Di Bella Coffee JV partners spar over licence agreement

Phillip Di Bella, founder and owner of the Australian coffee chain, has accused his Indian partner Sachin Sabharwal of personal and professional misconduct

An ugly battle has begun between the promoter of Australia’s fast-growing coffee chain Di Bella and his Indian partner, Sachin Sabharwal, in what is expected to head straight to the courts in the coming weeks.

In a public notice on Friday, Espresso Enterprises, parent of the Queensland-headquartered Di Bella Coffee, said it had terminated the intellectual property and product sale license agreement with Di Bella India, the 70:30 joint venture (JV) between Sabharwal and Di Bella Coffee founder Phillip Di Bella, on September 23.

“Any person dealing in any manner with Di Bella India and/or its managing director Sachin Sabharwal is solely responsible for consequences thereof and Espresso disowns any liability whatsoever in that regard,” the notice said.

Phillip Di Bella, director, Espresso, when contacted, said that Sabharwal had violated the licence agreement by selling his stakeholding to third-party members without notifying him or the parent company. Sabharwal, he said, had failed to provide monthly reports on the operations of the JV, which has been active in India for a year now, and had damaged the Di Bella brand name with his personal and professional misconduct. “We repeatedly received complaints from suppliers that he hadn't cleared their bills. There are criminal charges pertaining to cheating and rape against him in Mumbai and he also attempted to register completely unrelated Australian brands in India in complete violation of the license agreement the JV company had with Espresso,” Di Bella said over the phone from Singapore, a country he is currently touring.   

“We are suing Sachin in Australia as well as in India for damaging the Di Bella brand name,” the 37-year-old Australian said, whose chain totally sells 2.2 million cups every week in Australia and markets such as China and New Zealand, besides India. He did not specify the damages he intended to claim from Sabharwal or which was the legal firm representing Espresso in India. Sabharwal, when contacted, countered Di Bella, saying, "No breaches have occurred on the basis of our license agreement or shareholder's agreement. We are suing the Australian company Expresso Enterprises for wrongful termination of contract and injunction. We are also filing a suit for defamation under section 499 of the Indian Penal Code and also under the IT Act."

India is the third market outside of Australia for Di Bella — a country where it has moved quickly in the last one year. Positioned as a premium brand, Di Bella has 14 outlets in Mumbai and two in Hyderabad. The coffee chain in the past had said it proposed to expand operations to cities such as Delhi and Bangalore in a bid to scale up fast. “We have licenced the Di Bella brand in China and New Zealand as well. But in none of these markets have we had an experience as we have had in India,” Di Bella said.

He also said Espresso had begun talks with three other investors, one of whom could replace Sabharwal as the Indian partner in the JV. He declined to give further details of who these investors were. “We are committed to India and if you visit our stores in Mumbai or Hyderabad, you will find that all of them are open and it is business as usual at these outlets,” he said.