2017 Supreme(Ker) 780
IN THE HIGH COURT OF KERALA AT ERNAKULAM
SHAJI P. CHALY, J.
Female Health Company UK PLC., represented herein by its Power of Attorney Holder Manmeet Singh Gulati - Petitioner
Versus
HLL Lifecare Limited, represented by its Managing Director - Respondent
OP(ICA) No. 1 of 2017
Decided On : 07-07-2017
For the Petitioner: K.N. Sivasankaran, Sunil Shanker
For the Respondent: E.K. Madhavan, V. Krishna Menon, Uma Gopinath, J. Surya, Prinsun Philip
Headnote:
confidentiality - manufacturing agreement - [Arbitration and Conciliation Act, 1996, Section 9] - The court discussed the confidentiality provisions of the manufacturing agreement and found that the agreement was confined to the manufacture of the nitrile version of FC2. The court also found that there was no evidence to establish a violation of confidentiality in the manufacture of the latex version of FC2. The court dismissed the application for an injunction, as the petitioner failed to establish a prima facie case or balance of convenience in their favor.
Fact of the Case:
The petitioner sought an injunction to restrain the respondent from manufacturing the latex version of FC2, alleging a violation of confidentiality provisions in the manufacturing agreement.
Finding of the Court:
The court found that the manufacturing agreement was confined to the nitrile version of FC2 and that there was no evidence to establish a violation of confidentiality in the manufacture of the latex version of FC2. The court dismissed the application for an injunction.
Issues: The issues revolved around the scope of the manufacturing agreement, the alleged violation of confidentiality, and the entitlement to an injunction.
Ratio Decidendi: The court found that the manufacturing agreement was confined to the nitrile version of FC2 and that there was no evidence to establish a violation of confidentiality in the manufacture of the latex version of FC2. The court dismissed the application for an injunction.
Final Decision: The application for an injunction was dismissed by the court.
1. This is an application filed by the petitioner invoking Section 9 of the Arbitration and Conciliation Act, 1996 (for short 'the Act') seeking an interim measure before commencement of the arbitral proceedings. Initially, the registry has noted a defect with respect to the request made by the petitioner before this Court to secure an interim measure under Section 9 of the Act, 1996, especially as per the agreement, the place of arbitration is designated in Singapore. The said question was considered by this Court and passed an order dated 20.2.2017, after hearing rival parties, whereby it is held that, as provided under sub section (2) of Section 2 of the Act it is evident that, subject to an agreement to the contrary the provisions contained in Section 9 shall apply to international commercial arbitration, even if the place of arbitration is outside India, if an arbitral award made/to be made in such place is enforceable and recognized under provisions of Part II of Act, 1996. It is also found that the agreement specifically provides, the agreement shall be construed and interpreted in accordance with the laws of India and shall be subject to the courts of Thiruvananthapuram, Kerala State and therefore, the application is maintainable before this Court under Section 9 of the Act, 1996, which has become final.
2. Material facts for the disposal of ICA are as follows:-
On 27.11.2001 a memorandum of understanding is entered into by and between the petitioner and the respondent for the marketing, sale and distribution, and possible manufacturing of Female condom (hereinafter referred to as FC1), in India in four distinct phases. At the outset it is stated that, the petitioner is a company incorporated in the United Kingdom. While so, on 23.8.2003 a Distribution Agreement was signed between the petitioner and the respondent. As per the said agreement, petitioner appointed the respondent as its exclusive independent marketer and distributor in the prescribed territory for FC1. As per the Marketing Agreement all the confidential information and other Intellectual property was owned solely and exclusively by the petitioner and would remain the exclusive property of the petitioner, and the respondent have no right, title or interest in or to any of the confidential information.
3. On 3.3.2006 the petitioner and the respondent entered into another memorandum of understanding noting that the petitioner had developed a nitrile based female condom (hereinafter referred to as FC2), having similar features to the FC1 and the parties agreed to promptly enter into discussion and subject to the result of the same, negotiate a formal agreement to include a non-disclosure of confidential information clause. The manufacture of FC2 in India was to be conducted in two phases - Phase 1 related to the part, manufacturing of FC2 in India, which included inspection, lubrication and packaging and Phase 2 related to the respondent undertaking manufacturing of FC2 in India as per the requirement of local and global demand for regions and countries agreed on.
4. On 10.10.2006 parties again entered into an interim agreement, whereby petitioner agreed to provide the required machinery/equipment on loan basis as well as to provide necessary training at the petitioner's facilities to employees of respondent and right to sell the product manufactured during the training period in advance to the parties concluding a mutually acceptable Interim Agreement.
5. On 29.5.2008, to bring into effect the 2006 MOU and the interim agreement, petitioner and respondent executed the manufacturing agreement. As per the manufacturing agreement, respondent had decided to set up a manufacturing unit at Plot No.16/A1 possessed by the respondent at Cochin Special Economic Zone, Kochi for manufacturing FC2. For the purpose of setting up the manufacturing unit at Economi