The Bombay High Court has upheld the arbitral award allowing monetary claims of agri-business giant Mahyco Monsanto Biotech Ltd (MMB) against Nuziveedu Seeds Ltd and its associate companies with respect to Sub Licensing Agreements (SLA) concerning the use of Bt Cotton seeds.
The arbitral award passed in January 2019 was challenged by Nuziveedu and its associates primarily on the ground that the arbitral tribunal could not have adjudicated the matter when the Competition Commission of India (CCI) was examining if the SLA was anti-competitive.
Along with the arbitral award, they also challenged the order passed by the Tribunal in 2017, rejecting the challenge raised to its jurisdiction under Section 16 of the Arbitration and Conciliation Act 1996 citing the pendency of CCI proceedings.
Rejecting the arguments of the petitioners, a single bench of Justice R D Dhanuka held that jurisdiction of the Arbitration Tribunal and the CCI were not overlapping with respect to the claims raised under the SLA (Nuziveedu Seeds Ltd vs Mahyco Monsanto Biotech (India) Pvt Ltd and connected cases).
The Court noted that the Arbitral Tribunal, in this case, has only allowed the monetary claims made by the respondent by seeking enforcement of a contractual obligation which claim could not have been entertained or adjudicated upon by the CCI.
"In my view, 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. If the arbitral tribunal would have held that it had no jurisdiction in the matter and would have dismissed the claim of the respondent, the respondent would not have any remedy at all. 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. The arbitral tribunal rightly held that the respondent had certain rights under the 2015 SLA and thus it must also have remedy for enforcement of such rights. If the challenge to the jurisdiction of the tribunal by the respondent is upheld, it would result in dismissal of the claim without adjudication of the merits and without granting any relief to him. The tribunal accordingly rightly held that wherever there is right, there is a remedy or where there is no wrong without remedy", the Court observed.
It was held that the jurisdiction of CCI under Competition Act and jurisdiction of the arbitral tribunal under the 2015 SLA are altogether different and distinct and are not overlapping. The Court noted that the Arbitral Tribunal was adjudicating on purely contractual disputes which fall within the realm of widely worded arbitration clause in the underlying contracts between the parties. The issue before CCI that whether the contracts are in violation of competition act are distinct from the issues before the Arbitral Tribunal which was whether Monsanto was entitled to its contractual dues.
Further, the issues before CCI are still at large and in the absence of any declaration that the contracts are violative of Competition Act, the contracts have to be enforced. In the event CCI holds that the contracts are bad in the future, then there is enough remedy under Competition Act available to Nuziveedu to seek damages and compensation.
The judgment stated :
"In my view, since CCI did not have jurisdiction to grant any monetary claim for the sale of seeds under the 2015 SLA in favour of the respondent, the claims made by the respondent before the arbitral tribunal being an action in personam, exclusive jurisdiction to entertain such claim in the nature of an action in personam would vest only with the Civil Court or with the arbitral tribunal, as the case may be. There being an existence of arbitration agreement between the parties, such claim could be granted only by the arbitral tribunal. if the CCI comes to the conclusion in the pending proceedings that the said 2015 SLA is in violation of the provisions of the Competition Act, 2002, based on such finding of the CCI or the order of the Appellate Tribunal in an appeal against any finding of the CCI or under Section 42 A or Section 53Q (2) of the Act, the petitioner in that event, would entitled to seek claim for compensation against the respondent including the amount paid, if any, by the petitioner by implementing the impugned arbitral award".
The Court also held that the ouster clause in Section 61 of the Competition Act was not attracted in the case as the nature of disputes under the consideration of Arbitration Tribunal and the CCI were different.
"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 power to award monetary claim under such agreement.
In my view, merely because the petitioner had raised an issue that the 2015 SLA was void or anti-competitive or that the respondent no.1 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".
Recently, the Delhi HC had held that the jurisdiction of the CCI to entertain complaints regarding abuse of dominance by MMB in respect to patent rights was not excluded by the Patents Act.
Monsanto was represented in the Bombay HC by Mr. Iqbal Chagla, Mr. Janak Dwarkadas, Mr. Pravin Samdani, Mr. Sharan Jagtiani - Senior Advocates, Mr. Rishi Agrawal & Mr. Karan Luthra Parter Agrawal Law Associates, Mr. Shantanu Agarwal and Mr. Ramanujan, Mr Shriraj Dhru of Dhru & Co., Mumbai.
The petitioners were represented by Senior Advocates Darius Khambata and Navroz Seervai.