On 23 July 2020 the Bombay High Court in the case Nuziveedu Seeds Ltd. V. Mahyco Monsanto Biotech ( India) Pvt. Ltd, comprising of Justice R.D. Dhanuka held that the jurisdiction of CCI and the Arbitral Tribunal Act are not the same and are very distinct in nature.
FACTS-
A Commercial Arbitration Petition NO. 737 of 2019 was filed before the Arbitral Tribunal. The Petitioner was of the view that the Respondent had evolved cotton seeds with Bt. genes that produced endotoxin , that is virulent to cotton bollworms.
The Petitioner and the Respondent signed a Sub- Licence Agreement( SLA) on 20th January 2004. According to this agreement the Respondent gave 50 cotton seeds of transgenic variety with Bt. traits to the Petitioner allowing to produce new varieties of cotton seeds, giving the right to sell the cotton hybrid seeds for 10 years.
The agreement was extended until 10th March 2015 with the name of the Bollgard Technology Licence Agreement and both the parties agreed to continue the rights under the SLA, 2004.
Petitioner and Respondent Contentions
The Petitioner argued that according to the terms of the agreement the Respondent was required to pay the amount on every 450 gm packet of Bt. Cotton seeds. The Respondent had only paid Rs. 50 lakhs in this regard.
The trait value was regulated by the Central Government under the Cotton Seeds Price ( Control) Order 2015 since 2016. The Petitioner and other seed producing companies issued letters to the Respondent for charging the trait value unlike the trait value under the SLA 2015, along with the refund of the excess trait value that was paid from 2010 to 2014.
However, the Respondent adopted a callous attitude toward the letters and on 1st August 2015 filed a petition under Section- 9 of the Arbitration Act for depositing the amount against the Petitioner as per the terms of the SLA, 2015.
The Petitioner issued a letter dated 16th October 2015 for the refund of the excess trait value that was paid from 2010 to 2014. On 14th November 2015 the Respondent issued a Notice to discontinue the Sub- Licence Agreement of 2015.
The Government of India filed a reference before the Competition Commission of India( CCI) for investigating and taking appropriate action against the Respondent for defying the provisions of the Competition Act.
The Petitioner complained about the abusive conduct of the Respondent, charging high trait value over the State Government Price Control Notifications.
The CCI held that the provisions of Section -3 (4) and Section – 4 of the Competition Act were violated and ordered the Director-General to investigate in this regard.
There was a delay of two years in the submission of the Investigation Report by the Director-General to the CCI. On 18th February 2016, the Respondent filed an infringement suit against the Petitioner on the ground that the patent rights of the Respondent were violated by selling the cotton seeds with Bt. trait.
The Petitioner filed a counterclaim on the ground that the plants, plant varieties, seeds, and seed production activities were excluded from the Patents Act, 1970.
The Respondent invoked the Arbitration Agreement for settling the issue by way of Arbitration and nominated a former Judge of the Supreme Court as it’s the nominal arbitrator. A former Judge of the Supreme Court was appointed as the presiding arbitrator.
The Petitioner filed an application under Section- 16 of the Arbitration Act praying for the dismissal of the claims made by the Respondent. The Arbitral Tribunal dismissed the application filed by the Petitioner by the order dated 5th December 2016.
About 16 points for determination were framed by the Arbitral Tribunal and the pieces of evidence of both the parties was recorded. An Arbitral Award was made directing the Petitioner to pay Rs. 117.46 crores for the trait value that was paid between 1st April 2015 and 14th November 2015 as per the SLA, with an interest at the rate of 6% per annum from 23rd February 2016 till the date of the award and interest at the rate of 12% per annum from the date of the award till the date of payment/ realization.
The Arbitral Tribunal rejected the rest of the claims of the respondent and the Learned third arbitrator dismissed the claims made by the respondent. The Petitioner was aggrieved by the award dated 16th January 2019 and order dated 11th May 2017 filed the Commercial Arbitration Petition No. 737 of 2019.
JUDGEMENT-
It was observed by the Court the Arbitral Tribunal only allowed the monetary claims made by the Respondent. It was stated that” the tribunal rightly held that the adjudication by the tribunal shall be in the nature of the right and liability of the parties to the agreement and would relate to right in personam and not right in rem. In the proceedings before the CCI, whatever may be the outcome, the respondent would not be able to get any effective relief or decree or award directing the petitioner herein to pay the particular amount to the respondent. It was rightly held by the Arbitral Tribunal that the respondent had certain rights under the 2015 SLA and thus it must also have a remedy for enforcement of such rights.”
The Court opined that the jurisdiction of CCI and the Arbitral Tribunal is different in nature. Since the CCI had no power to grant the monetary claim under the SLA, 2015, so the Civil Court or the Arbitral Tribunal has the jurisdiction to entertain the claim of the respondent.
Section – 61 of the Competition Act was not applicable here as the nature of the disputes is different in relation to Arbitration Tribunal and the CCI.
The Court said that “ in so far as the reliance placed by the learned senior counsel on Section- 61 of the Competition Act in support of the submission that the powers of the Civil Court or the Arbitral Tribunal, as the case may be, are excluded under the said provision to determine any matter which the CCI or the Appellate Tribunal is empowered to determine under the provision of the Competition Act is concerned, in my view, reliance placed on the said provision to exclude the powers of the arbitral tribunal to decide the monetary claim, in this case, is totally misplaced. The arbitral tribunal cannot decide the issue whether the said 2015 SLA was anti-competitive or was in violation of Section- 3 of the Competition Act or not and deserves to be declared as void or required modification but has the power to award monetary claim under such agreement.”
It was held that the since the petitioner had raised an issue that the 2015 SLA was void or that the respondent had abused the dominant position and those issues could be decided only by the CCI, it would not preclude the arbitral tribunal from deciding the monetary claims made before it which were not within the jurisdiction of the CCI.
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