The Bombay High Court has settled the long-term dispute in the agri-business. The judgement also serves as a precedent. It has ruled that there exists no overlap between the jurisdiction of CCI and Arbitral Tribunal.
Brief Facts of the Case
The respondent, Mahyco Monsanto India Ltd., is an agri-business giant. It sub-licenses the transgenic cotton variety seeds impregnated with Bt. Genes. The petitioner, Nuziveedu Seeds Ltd., signed a contract in 2005 for the sale of seeds in Maharashtra. For the same, the petitioners must pay ‘trait value’ or patent fee on revenue generated from the sale of seeds.
In January 2018, the respondents approached the arbitral tribunal on non-receiving of the payment. The tribunal declared an award of Rs. 138 crore for the respondents. In the meantime, the validity of the agreement was being adjudicated before CCI. Hence, the petitioners challenged the award on the grounds of jurisdiction and violations of public policy.
Submissions before the Court
The petitioner’s counsel submitted that the computation of the trait fee was based on the number of seeds. However, the respondent prima facie charged an excessive, unreasonable and discriminatory trait value. Hence, the Sub- License Agreement (SLA) was void under section 3 and 4 of the Competition Act, 2002. Moreover, the validity of the SLA was a subject matter in the jurisdiction of Competition Commission of India. The monetary claims before the arbitral tribunal were based on the SLA. In turn, no matter under SLA was arbitrable.
The petitioner’s counsel also submitted that the Government of India had filed complaints against such agreements. They termed it as anti-competitive and abuse of dominance under various sections of Competition Act, 2002. The Act also expressly and impliedly excludes adjudication of competition law disputes through arbitration.
Court’s Observation
The Court noted that the tribunal had powers to adjudicate the right and liabilities as under agreement. This would relate to right in personam and not right in rem. Alternatively, had the tribunal dismissed the matter, the respondent would be left with no remedy. The outcome of the CCI proceedings, in no manner, would pay the amount to the respondents. The tribunal has abided by the legal principle – ubi jus ibi remedium.
It also emphasized that the jurisdiction to grant any monetary claim would be an action in personam. The jurisdiction to pass any such action is vested with the Civil Court or Arbitral Tribunal. Further, the petitioner would be entitled to receive compensation for any such amount if the CCI concludes it to be a violation. However, no remedy can be denied to the respondents at a nascent stage.
The Court has rejected the petitioner’s submissions under Section 61 of the Competition Act, 2002. The provision excludes Civil Courts and Arbitral Tribunals to decide on matters empowered to the CCI. Hence, there lies a clear distinction based on the nature of the subject matter in both the proceedings. The Court said:
“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.”
Ratio Decidendi
The Court has laid down the rationale from its observations. It asserted that the jurisdiction of the Competition Commission of India does not overlap with that of an Arbitral Tribunal.
Court’s Order
Justice R. D. Dhanuka pronounced the judgement. The Court has upheld the arbitral award. It stated, “This Court does not find any infirmity with the impugned award nor any patent illegality in the impugned award. The petition is devoid of merit and deserves to be dismissed.”
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