Mundipharma Ag vs Wockhardt Ltd.
1990 Latest Caselaw 401 Del

JUDGMENT

D.P. Wadhwa, J.

(1) In this petition filed under section 20 of the Arbitration Act, 1940 (for short 'the Act') I am to decide by this order an application (I.A. 5010/90) of the petitioner filed under section 41 and Ii Schedule of' the Act read with Arbitration (Protocol and Convention) Act, 1937 and again read with the International Chamber of Commerce Rules of Arbitration.

(2) When I first issued notices in the petition as well as in the application I had expressed my doubt if proceedings under section 20 of the Act were at all maintainable as it appeared to me that under the arbitration agreement between the parties the award given would be a foreign award and would be governed by the Foreign Awards (Recognition and Enforcement) Act, 1961 for short 'the Foreign Awards Act'). It was, however, submitted at the time that if ultimately this court took the view that proceedings under the Act were not maintainable the petitioner would amend the petition to convert it into a one for suit for injunction. The question of maintainability of the petition was, therefore, left open at that time. An interim order was made restraining the respondent either by itself or through its officers, servants and agents from manufacturing, selling or offering for sale or even advertising whether directly or indirectly in the preparations of Microbicidal Water-soluble ointment under the name of Wokadine containing "Polyvinylpyrolidonelodine" (PVP-I) conforming to Povidone-Iodine Ointment USP. It was, however, clarified in that order that otherwise there was no objection to the respondent using the trade mark "WORKDINE" for any other product or preparation.

(3) I have heard arguments in detail on the application. With the question of grant of interim injunction was linked the question of maintainability of the petition itself. However, since the arguments on the maintainability of the petition were taking considerable time it was submitted by Mr. Rohtagi. learned counsel for the respondent, that for the purpose of decision of this application he will not challenge the maintainability of the petition and that respondent assumed that the petition under section 20 of the Act was maintainable. This concession he said he was making as the interim order already made was adversely affecting the respondent who was to come in the market as from 1-9-1990 after the agreement between the parties was to terminate on 31-8-1990. I was not quite happy with such a concession being given as I would have liked to decide the question if the petition was maintainable or not. Important questions did arise, as the facts presently would show, touching the branch of law known as the conflict of laws. But since the decision of those questions would have taken some time I allowed the request of the respondent to hear the arguments defined to the present application particularly in view of the fact that there was an interim order operating against the respondent.

(4) The petitioner is a company under the laws of Switzerland having its principal place of business at Postfach, Switzerland. Respondent is a company incorporated under the laws of this country. Petitioner claims to be engaged in the manufacture, development and marketing of various drugs and pharmaceuticals since the year 1957. It also claimed that it manufactured a whole range of pharmaceutical preparations containing Polyvinyl pyrolidone-Iodine (PVP-I). On 25-8-1976 the parties entered into an agreement whereby the petitioner granted a license to the respondent to sell within the territory of India pharmaceutical preparations containing as an active principal PVP-I and which were marketed in different countries under the trade marks 'Betadine' and Isodine. license was also granted to use the aforesaid trade marks and the active principle to be used in the aforesaid preparations was PVP-I. All these things have been mentioned respectively in Annexures I, Ii, Iv and V to the agreement. license was also granted to manufacture and package the preparations in accordance with the manufacturing and packing data supplied by the petitioner. Discretion was, however, given to the respondent to adopt such packaging design as it might think proper but only after having received the petitioners approval thereto, such approval not to be unreasonably withheld. It was stipulated that technical and manufacturing data shall be maintained in confidence by the respondent and shall be disclosed to no one outside title organisation of the respondent and even within its organisation only to those who needed to know the same. A condition was also imposed that in addition the respondent upon and after termination of the agreement shall nevertheless maintain the confidence and shall make no use of the same as well until the same shall become public knowledge (Clause 2). Other clauses of the agreement which are. relevant would be clause 27 putting a restraint on the respondent not to sell any preparation which included PVP-I or any derivatives thereof for a period of three years and clauses 34 and 35 relating to the applicability of laws and to the disputes being decided by arbitration. It will be appropriate to set ov.t these three clauses as under : "27.While this Agreement is in force licensee shall add no preparation to its line of preparations which competes with the preparations and the product contained therein. Upon and after the termination of this agreement for any cause whatsoever licensee shall add no preparation to his line which includes the product or any derivatives thereof for a period of three (3) years following such termination. 34. The validity, interpretation and performance of this agreement, its amendments and each of its provisions shall be determined and governed by the laws Switzerland. 35. All disputes and differences, which may arise out of this agreement including any dispute arising out of the termination of this agreement shall be settled finally under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with the Rules and holding office in Zurich, Switzerland."

(5) Annexures to this agreement were amended by the parties in October, 1989. The territory was extended to Nepal as well. Annexure V was added relating to the patents. For my purpose Annexures Ii and Iii are relevant and may be set out "2.Annex Ii to be varied so as to newly read as follows : Annex n The Preparations "The first preparation as set forth in the annexed agreement shall consist of a pharmaceutical preparation as specified by Mundipharma containing as active principle product described in Annex Ii and which is marketed in different countries under the trade mark Betadine, Isodine, namely : Antiseptic Solution-5 per cent. Gaig1e/Moutliwash-1 per cent. Ointment-5 per cent. Surgical Scrub-7.5 per cent. Vaginal Pessaries Cream--5 per cent. The second preparation as set forth in the annexed agreement shall consist of a pharmaceutical preparation as specified by Mundipharma containing as active principle product described in Annex Iii and which is known under the trademark ECZO-BETADINE, namely: Anti-inflammatory microbicidal Cream I percent. Annex. Ill to be varied so as to newly read as follows : Annex Iii The Products The product contained in the first preparation described in Annex. Ii shall be Mundidone brand of poly-l-vinyl-2-pyrrolidone-iodine as specified by MUNDIPHARMA. The products contained in the second Preparation described in Annex. Ii shall be Mundidone brand of poly-l-vinyl-2-pyrrolidone-iodine and fluocinolone acetonid as specified by MUNDIPHARMA."

(6) Let me set out Annexures Ii and Iii as existed in the original agreement to understand the controversy :    "ANNEX.II The Preparations as set forth in the annexed Agreement shall consist of the pharmaceutical preparations containing as active principle polyvinylpyrrolidone-iodine and which are marketed in different countries under the trade marks: "Betadine", "Isodine".  

 ANNEX.III The product contained in the Preparations as set forth in the annexed Agreement shall be : Polyvinylpyrolidone-iodine".  

(7) The agreement was to commence on 25-8-1976, the date of the agreement itself and was to extend for a period of live years ending on 31st August, 1981. The agreement was to be automatically renewed thereafter for renewal terms of three years unless either party gave six months notice of its intention to terminate the agreement. In the normal course, therefore, the agreement was to remain in force up to 31st August, 1990. However, by letter dated 9-2-1990 the petitioner gave six months notice to the respondent of its intention to terminate the agreement which was to expire on 31-8-1990. This notice it was stated was given in pursuance to clause 4 of the agreement aforeoientioned. On 31-5-1990 the petitioner wrote another letter to the respondent slating that it had come to its notice that the respondent had made enquiry of Gaf Chemicals Corporation for annotation for 2000-3000 kgs. of PVP-I. The petitioner, therefore, drew attention of the respondent to clause 12(a) of the agreement that any purchase of PVP-I from any other party would constitute a breach to contract on the part of the respondent. The petitioner, therefore, wanted an assurance that respondent would comply with the provisions of the agreement particularly in reference to clause 27 thereof. The respondent responded by merely staling that it was fully aware of all its obligations and rights under the agreement and would certainly respect the terms oi the agreement. Nothing was said of its enquiry from the Gaf Chemicals Corporation for purchase of PVP-I. I may note here itself that this company (GAF) is manufacturer of PVP-I. The petitioner itself does not manufacture PVP-I and on orders received from the respondent would supply PVP-I to the respondent from Gaf itself. To that extent petitioner is merely a trading company.

(8) The parties had entered into another agreement as well on the same date i.e. 25-8-1976 whereby the respondent was permitted to use the registered trade mark 'Betadine' of the petitioner.

(9) There is on record a letter dated 4-7-1990 from the respondent to the petitioner respecting the supply of Mundidone brand of PVP-I. It is stated in this letter that an order was placed on 19-1-1990 on the petitioner for supply of 2.5 tons of Mundidone PVP-I from Gaf for shipment between 1st and 5th of April 1990 and that the shipment was made only on 22-5-1990 and had arrived in India and was awaiting Customs clearance. The respondent, therefore, sought instructions as to the disposal of this quantity of Mundidone. PVP-I as it was brought to the notice of the petitioner of its notice terminating the agreement effective 31-8-1990. It was pointed out that if the respondent cleared the goods at that stage and manufactured the formulations, the responsibility for making the formulations would be of the petitioner as the respondent would not be able lo sell them in the market. The respondent, therefore, in order to avoid unnecessary complications wanted to divert the shipment to the new joint venture company of the petitoner. In the documents filed by the respondent, there is a letter from the petitioner dated 19-7-1990 in response to the letter of 4-7-1990 of the respondent It was mentioned )'n this letter that the petitioner had arranged with M/s. Win-Medicare Ltd. Nehru Place, New Delhi, to get the consignment of Mundidone brand of PVP-I transferred in its name.

(10) I mast record here. that when ax parte order was made an impression was sought to be created on this court that in spite of notice of termination of the agreement which was given on 9-2-1990 the respondent was going ahead with the purchase of PVP-I in breach of the agreement though the agreement itself W&E to expire on 31-8-1990. The documents brought on record by the respondent would show that this was not the position. The" goods being Mundidone brand of PVP-I which had arrived in India were in pursuance to the order placed by the respondent as far back as in January 1990 and the goods were shipped by Gaf directly at the instance of the petitioner. No grievance could be made, therefore, that the respondent committed beach of the agreement before its expiry.

(11) The grievance of the petitioner is that in breach of the terms of the agreement the respondent is coming out in the market for sale of preparations containing PVP-I as its ingredients in its trade name 'WOKADINE'. Dispute is, however, not relating to the use of the trade mark 'WOKADINE' which admittedly belongs to the respondent. The disputes which the petitioner wants to be referred to the arbitration have been set out in para 33 of the petition and these are as under :- (A)Whether the action of the Respondent in preparing and manufacturing a preparation of an ointment Wokadine with PVP-I and with an intent to sell the same in India during the subsistence of the license Agreement and /or before the expiry of the 3 years from the date of expiry of the license Agreement on 31st August 1990 does not amount to a violation of Clause 27 of the license Agreement dated 25th August, 1976 ? (b) Whether the action of the Respondent In directly procuring supplies of PVP-I from Gap Chemical Corporation, Germany, for its own use, before the termination of the. license Agreement on 31st August, 1990 does not amount to breach of the license Agreement dated 25th August, 1976 ? (c) Whether the action ofthe Respondent in failing to give the categorical assurance as required by the petitioner in its letters dated 1st June, 1990; 14th June, 1990; and the legal notice dated 29th of June, 1990 does not amount to: a violation of the terms of the license Agreement dated 25th August, 1976 ? (d) Whether-the action of the Respondent in intending to package and sell any preparation containing PVP-I in any packaging design similar to that of Betadine does not amount to infringement of copyright of the petitioner and[or amount to passing off ? (e) Whether the failure of the Respondent to comply with the contents of the petitioner's letter dated 1st June, 1990 requiring the Respondent to 'deliver up' all the goods and materials supplied to it or obtained by it during the subsistence of the license Agreement does not amount to violation of the terms of the license Agreement ? (f) Whether the Petitioner is entitled to any damages in respect of the breach of contract by the Respondent ? (g) Relief, if any, together with costs throuhout.

(12) In the application the petitioner has sought interim relict by way of injunction restraining the respondent from dealing with the preparations containing PVP-I for a period up to 31-8-1983 and also restraining the respondent from using the confidential information regarding the method of manufacturing all PVP-I range of products which confidential information was imparted by the petitioner and. thirdly. from restraining the respondent from passing off their goods and/or infringing copyright of the petitioner in the artistic work being the colour, combination, lay out, get up and arrangement of artistic features of the labels, cartons, tubes in which the preparations had been earlier marketed by the respondent under the agreement with 'he petitioner.

(13) The petitioner does not seek restraint on the respondent from using the trade mark 'Wokadine' of the respondent. As has been seen, the principal grievance is about the user of PVP-I in the preparations by the respondent either during the currency of the agreement or three years after that. Anticipating the defense that the restraint put on the respondent in the agreement would be hit by the doctrine of 'restraint of trade' being opposed to public policy, the petitioner filed an affidavit of Ms. Antoinette F Werner, a lawyer practicing in Switzerland. At the time this affidavit was sworn Ms. Werner was in India. She stated that she held a law degree from the University of Laussanne, Switzerland, and had been advising various Swiss Corporations on legal matters and was well acquainted with the business laws. She said- she 'had seen the agreement in question and that clause 27 of the agreement containing a prohibition to compete for the respondent during the license and three years after termination was enforceable under the Swiss law. This affidavit is sought to be used as an opinion of a person specially skilled in foreign law being relevant under section 45 of the Indian Evidence Act, 1872.

(14) During the hearing of the application it was brought to my notice by Mr. Ramji Srinivasan, learned counsel for the petitioner, that the respondent filed a suit in the District Court at Aurangabad and on 27-8-1990 an ex parte order was made therein whereby the petitioner herein was restrained by an injunction from "using, imitating in any manner whatever or otherwise copying and thereby infringing the plaintiff's copyright, using any material in the trade dress, style of lettering, art work, layout of cartons, tubes, labels, information sheet etc. identical/ similar or any combination thereof to Exhibits A-l to A-14 for the purpose of marketing the Povidone Iodine preparations with the, trade name Betadine or otherwise". Mr. Srinivasan said the question of infringement of copyright was a dispute in the present controversy before me and according to the petitioner it was the petitioner who was the owner of the copyrights in question. If reference is made to Chapter Xii of the Copyright Act, 1957 relating to civil remedies in case of infringement of copyright; every suit or other civil proceedings arising under that Chapter in respect of Infringement of copyright in any work or the infringement of any other right conferred by that Act nave io be instituted in the district court having jurisdiction. This would mean that in case where copyright Hi any work is infringed the remedies by way of injunction damages, account. and otherwise as arc or may be conferred by i?w for the infringement of such a right, cannot be subject-matter of arbitration. This is again on the assumption that present petition under section 20 of the Act is maintainable .1. therefore, cannot accept the plea of Mr. Srinivasan.

(15) The respondent contested the claim of the petitioner and maintainability of the proceedings themselves. It submitted that the petitioner was itself not ihe manufacturer of PVP-I and that PVP-I was manufactured by various manufacturers all over the world. The respondent was merely a trading company. It would buy PVP-I from manufacturers and sell the same to the respondent for the purpose of manufacture of the preparations marketed under the brand 'Betadine' of the petiioner. This again is not disputed. But the contention of the petitioner in effect is that formulations supplied by it lo the respondent during the course of the subsistence of the agreement were confidential in nature and the respondent cannot be permitted to the use of PVP-I in the manufacture of its preparations as the respondent would be using the confidential nature of the information supplied by the petitioner. The respondent submitted that formulations are now a matter of public knowledge and in any case, it said that, it would not use formulation of the petitioner which it was using for the manufacture of 'Betadine' brand of preparations containing PVP-I though, according to the respondent, these arc no longer same. Nevertheless the respondent submitted that it will not use the formulations of the petitioner in its preparations using; PVP-I. It referred to various pharmacopoeias to justify its stand. Respondent also submitted that restraint put on it from the use of PVP-I in the manufacture of its various preparations as envisaged under the agreement would be hit by section 27 of the Indian Contract Act, 1872, which says every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind is to that extent void. Then the submission of the respondent has been that the restraint in the agreement dated 25-8-1976 firstly pertain to PVP-I and which agreement was subsequently amended in October 1989 and now the restraint was confined to the use of Mundidone brand of PVP-I. This amendment, it was submitted, was occasioned because formulations using PVP-I were now a matter of public knowledge.

(16) Many questions were raised about the maintainability of the petition under section 20 of the Act itself. It is stated that the arbitration agreement in the present case was outside the Act, and the provisions of the Act were, thus. not applicable as those were in conflict with the I.C.C Court of Arbitration Rules. If the parties stick to the arbitration agreement it would certainly result in a foreign award within the meaning of the Foreign Awards (Recognition and Enforcement) Act. 1961. Under clause 34 of the agreement the parties agreed about the applicability of the laws of Switzerland to the agreement and the arbitration of the disputes by the I.C.C. Court of Arbitration of the International Chamber of Commerce. If the petition under section 20 is allowed., could this court exercise jurisdiction over the arbitrators or their proceedings? If it is held that section 20(5) of the Act applied, taking the contention. of the petitioner to be correct, what would be the extent of court's jurisdiction for making interim orders under section 41 of the Act when the arbitration is being held outside the country and whether procedural laws relating to arbitration of that country would apply when the parties agreed that substantive laws of Switzerland to the validity of the terms of the agreement would apply ? The contention of the petitioner has, however, been that the Act would be applicable and particularly sub-section (5) of section 20 read with sections 46 and 47 of the Act. Otherwise, it said, it has nowhere to go for enforcing the respondent to submit to arbitration in terms of the abrogation agreement between the parties. It was submitted that the Rules of the I.C.C. Court of Arbitration not being statutory in nature would form part of the contract between the parties for the purpose of holding of arbitration proceedings. If that be so, there is certainly certainly between these Rules and the provisions of the Act. Which would then prevail? All these and other questions were raised, but as noted above it was conceded by Mr. Rohtagi, learned counsel for the respondent, that for the purpose of decision of the application he would accept the jurisdiction of this court as to the maintainability of the petition. I would say no more on this subject and leave all these questions to be decided while hearing the main petition.

(17) Preparations containing PVP-I are widely being used all over the world. As noted above, petitioner itself is not the manufacturer of PVP-I. If reference is made to MARTINDALE-The Extra Pharmacopoeia (28th Edition), qualities of PVP-I are described and so are the preparations made from PVP-T. Proprietary preparations are also described therein and the name by which these are marketed in various countries. Extracts from Us Pharmacopoeia would show various formulations containing PVP-I and as to how these are prepared and stored. Basf Company manufacturing PVP-I also gives all the details and so would the Eastern Pharmacist, August 1987 issue. In fact the petitioner itself has given various formulations in the documents filed by it and all these would show that all these formulations are not exclusive to the petitioner. In any case the respondent has given undertaking that it will not use the formulations of the petitioner. I do not think there is any secrecy about the formulations of the petitioner. The question then arises is to why a restraint on the respondent and what purpose and benefit is to be achieved by the petitioner in insisting on clause 27 of the agreement.

(18) The petitioner submitted that clause 27 of the agreement containing prohibition during the subsistence of the agreement and three years thereafter was enforceable under the Swiss law. This submission was with reference to clause 34 which says that the terms of the agreement were to be governed by the laws of Switzerland. I am of the view that for the purpose of deciding the validity of clause 27 of the agreement I have to see if it passes the test under section 27 of the Contract Act which makes every agreement by which one is restrained from exercising a lawful profession, trade or business of any kind to be void to that extent. No one before me disputes that clause 27 is within the category of agreements in restraint of trade. Law is against restrain of trade and the courts have not locked upon such agreements with favor. Such agreements sometimes are, however, required to be tested on the ground of reasonableness. This court has to see if clause 27 is valid as per laws of this country when the clause is under challenge in the proceedings before this Court. This is particularly so when the agreement is to be performed in this country. Whether the arbitrators are bound to apply the substantive laws of Switzerland relating to the contract in question when the matter goes for arbitration in terms of arbitration agreement between the parties is a different question altogether. Even in that case the award which would be a foreign award, if made. would have to be tested on the touchstone of public policy of this country, if that foreign award is sought to be enforced in this country. (See clause (b) of Article V(2) of the Schedule and section 7(l)(b)(ii) of the Foreign Awards Act). Assuming, however, that it would be laws of Switzerland that will govern the validity of clause 21, the question then arises what is that law? The petitioner has filed an affidavit of a lawyer practicing in Switzerland. This is sought to be introduced as opinion of an expert being relevant under section 45 of the Indian Evidence Act, 1972. Foreign law is no doubt a question of fact. The opinion of an expert on the subject has to be tested by cross-examination. When at an interim stage only an affidavit is to be relied upon this affidavit has to be complete in all respects. The affidavit must show the qualification and experience of the expert. It must state if the law on the subject is codified and must also refer to judicial precedents in support of his views. It may perhaps be said that if the law is codified, expert opinion is not necessary on the subject,. But sometimes in such cases also court would like to have the opinion of an expert as to what interpretation has been put on the law in the courts in the foreign country concerned. The opinion of the expert must be clear and cogent. I find the opinion of Ms. Werner on the question of foreign law quite obscure. It is more like a certificate. I will not, therefore, take any notice of this affidavit. Thus, there is nothing on record to show as to what is the Swiss law on the subject of restraint of trade.

(19) Various decisions both Indian and English on thg question of law relating to restraint of trade were cited before me. Of all the English decisions, however, I find the decision of the House of Lords in Esso Petroleum Co. Ltd. v. Harber's Garage (Stourport), Ltd., (1967) I All England Law Harper's 699,(l) relevant for my purpose. In this case there were two solus agreements within the category of agreements in -reatraint of trade and accordingly required to 'be justified on the ground of reasonableness, and the crucial consideration in determining reasonableness was the length of the period for which each agreement was to last. In one case the agreement was. to last between four to five years and was held to be reasonable, but in the other case the agreement was to last for twenty one years and was held not to be enforceable as being in unreasonable restrain of trade. When the action was brought both the agreements were subsisting. It is not necessary for me to refer to the facts in that case. Lord Reid in his judgment observed (page 708); "So in every case it is necessary to consider, first whether the restraint went farther than to afford adequate protection to the party in whose favor it was granted, secondly "whether it can be justified as being in the interest of the patty restrained, and thirdly whether it must be held contrary to the public interest", and then "I think it better to ascertain what were the legitimate interests of the appellants which they were entitled to protect, and then to see whether these restraints were more than adequate for that purpose". An earlier statement that "the quantum of consideration may enter into the question of the reasonableness of the contract" was accepted.

(20) In this view that to decide the validity of the contract it will be the Indian law which is to govern I am supported by a decision of the Bombay High Court in Taprogge Gesellschatt Mbh v, Iaec India Ltd, ., In Niranjan Shanar Golikari v. Century Spinning and Manufacturing Co. Ltd. , the Supreme Court observed that rule now was that restraints whether general or partial might be good if they were reasonable and that a restraint upon. freedom of contract must be shown to be. reasonably necessary for the purpose of freedom of trade. The court further observed that where an agreement was challenged on the ground of its being a restraint of trade the onus was upon the parties supporting the contract to show that the restraint was reasonably necessary to protect his interests and that once this onus was discharged, the onus of showing that the restraint was nevertheless injurious to the public was upon the party attacking the contract. .The court also held that considerations against restrictive convenants were different in cases where the restriction was to apply during the period after the. termination of the contract than those m cases where it was to operate during the period of the contract. The Supreme Court in this case was concerned with the negative convenants operative during the period of contract of employment when the employee was bound to serve his employer exclusively and in that case the court was of the view that such agreements were generally not regarded as restraint of trade and, therefore, did not fall under section 27 of the Contract Act. In Superintendence Company of India (P) Ltd.v. Krishan Murgai, , the Supreme Court was again, concerned with restrictive laws in an agreement between the employer and employee. Two questions were raised in the appeal: 1) whether a post service restrictive convenant in restraint of trade as contained in clause 10 of the. service agreement between the. parties was void under section 27 of the Contract Act, and (2) whether the said. restrictive covenant, assuming it .to be valid, Was on its terms enforceable at the instance of the appellant company against the respondent employee. Three Judges constituted this bench. Two Judges (Tuizapurkar and Untwalia, JJ.) ltd not deal with the first question and dismissed the appeal Ob the second question holding that under the terms of the agreement clause 10 could not be enforced as the employee did not reeve the service? voluntarily and rather the services were terminated. A.P. Sen, J" the third Judge/gave his saturate judgment. He examined both the questions and came to the conclusion that appeal be dismissed. Sen J. distinguished decisions of the earlier Supreme Court decision in Niranjan Shankar Golikari's case (supra) observing that that case was of little assistance as in that case the negative convenant was sought to be enforced during the term of the employment of the employee and in the instant, case. the negative convenant was sought to be enforced after the termination of services of the employee. Sen J.was.of the view that restriction contained in. clause 10 of the agreement was obviously in restraint of trade and therefore illegal and unenforceable under section 27 of the Contract Act. He further observer as under :- "WHILE the extract ..Act.1872, dose not profess to be a complete cede dealing with the law relating to contracts, was emphasize that to the extent the Act deals with a particular subject, it is exhaustive upon the same and it is not permissible to import the principles of English Law dehors the statutory provision, unless the statute is such that it cannot be understood without the aid of the English Law. The provisions of section 27 of the Act were lifted from Hom. David D. Field's Draft Code for New York based upon the old English doctrine of restraint Of trade, as prevailing in ancient times' When a rule of English Law receives statutory recognition by the Indian Legislature, it is the language of the Act which determines the scope, uninfluenced by the manner in which the analogous provision comes to be construed narrowly, or, otherwise modified, in order to bring the construction within the scope and limitations of the rule governing the English doctrine restraint of trade.".

and then :- "A contract in restraint of trade is one by which a party restricts his "future liberty to carry on his trade business or profession in such manner and with such persons as he chooses. A contract of this class is prima facie void, but it becomes binding upon proof that the restriction is justifiable in the circumstances as being reasonable from the point of view of the parties themselves and also of the community." and finally as. under :-- "Neither the test of reasonableness nor the .principle that the restraint being partial was reasonable is applicable to a case governed by Section 27 of the Contract Act, unless it falls within Exception 1. We, therefore, feel that no useful purpose will be served in discussing the several English Decisions cited at the Bar."

(21) In the present case before me the petitioner is quite aware of the fact that clause 27 is in restraint of trade inasmuch as it itself submitted that this clause was nevertheless valid according to Swiss laws and as noted above in support of this submission an affidavit of a lawyer practicing in Switzerland was filed. This clause may be good so far as during the currency of the agreement but it cannot stand after the agreement stands terminated effective from 31-8-1990. It is certainly hit by Section 27 of the Contract Act. Assuming it to be valid it will be unreasonable to enforce such a clause. As noted above petitioner is not itself the manufacturer of PVP-I. It rather buys it from outside agencies and supplies the same to the respondent under its bad name 'MUNDIDONE'. The formulations which go into the preparation of medicines are no longer the matter of any secrecy. It is now a matter of public knowledge. In any case, the respondent states I hat they will not use the formulations of the petitioner. No particular advantage or purpose is shown as to why the restraint should continue after the termination of the agreement. The agreement itself has held the field for fourteen long years. Any further period in any case would not be reasonable in the circumstances of the case. Moreover, PVP-I is freely available and any one can make preparations there from using formulation processes which are all now well known. That is no reason why the respondent be under any restraint

(22) The agreements all over use the words 'preparations' and 'product'. At times the word 'preparations is with capital 'P' and the word 'product' with capital 'P' : It was contended by the petitioner that this difference is of no consequence. That is not correct. Weaver the words 'Preparations' and 'Product' arc used in the agreement they have reference to Annexures Ii and Iii of the agreement only. It is, therefore) not that the words 'preparations' and 'Preparations' and similarly 'product' and 'Product' are without any purpose or significance. Now if clause 27 is read with Annexures Ii and Iii as given in the agreement before its amendment, the Preparations are pharmaceutical preparations containing as active principle PVP-I and marketed under trade marks 'Betadine' and Isodine' and the Product as PVP-I, to which the restraint applies. After the amendment of Annexures in October 1989 the Product in Annexure Iii is now Mendidone brand of PVP-I as specified by the petitioner, Annexure Ii being not relevant for my purpose. The restraint, therefore, does not apply to the use of PVP-I as such but only to the Mundidone brand of PVP-I as specified by the petitioner. I have already referred to the correspondence relating to the supply of PVP-I which could not be used by the respondent having placed order for the same in January 1990 but being unable to use during the currency of the agreement. In all this correspondence it is 'MUNDIDONE' brand of PVP-I. I think the use of the term Mundidone brand of PVP-I deliberate. Both the parties are experienced traders and when they agreed to amend Annexure Iii from the Product PVP-I to Mundidone brand of PVP-I they must have been aware of the consequence of the change of technology and it will be too much for me to stultify the agreement after amendment by saying that amendment made no difference. The contention of the respondent that restraint applied only to Mundidone brand of PVP-I appears to be correct.

(23) For all these reasons I do not find any merit in the application and would dismiss the same with costs. Interim order made earlier shall stand vacated.