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2009 Supreme(Bom) 1764
High Court of Judicature at Bombay
THE HONOURABLE MR. JUSTICE ANOOP V. MOHTA
Novartis Vaccines & Diagnostics Inc.
Versus
Aventis Pharma Limited.
ARBITRATION PETITION NO. 763 OF 2009
Decided on : 18-12-2009
For the Petitioner:T. Andhyarujina, Sr. Counsel with Zal Andhyarujina, Sr.Counsel with Atul Rajadhyaksha i/b. M/s.Wakhariya & Wakhariya, Advocates. For the Respondent:D.J.Khambatta, Sr. Counsel with M. S. Doctor i/b. Bachubhai Munim & Co., Advocates.
Headnote:Arbitration & Conciliation Act, 1996 - Section 9 - Arbitration petition - Interim injunction sought by petitioner against respondents - Joint venture agreement executed between petitioner and respondent - Agreement recognized respondents rights to continue marketing and distribution of anti-rabies vaccine - Agreement not to be renewed, resolved in board meeting of company - Notice to respondent - Suit and notice of motion against by respondent - Petitioner preferred for arbitration - Sole arbitrator appointed - Award by arbitrator holding agreement not renewed by company - Respondent started distribution of same manufactured by other company - Held - Both parties governed by JVA - No negative or positive covenant clause in agreement - Other partners can be permitted to do rival business of same nature if agreed specifically by parties - Affected partner entitled to seek injunction/relief - A interim injunction granted - Petition allowed. - Admittedly, there is no negative and/or positive covenant/clause in the agreement in question. The submission that it is the policy of the law not to restrain any of the partner or person or Director from carrying on rival or competing business specially in the absence of an express negative covenant which is based upon the policy of the law as provided under Section 11(2) of the Partnership Act read with Section 27 of the Contract Act is not acceptable. In Court view it is unacceptable to allow or permit any one partner to do a competing business without specific written permission/contract. The submission referring to Section 16 cannot be permitted to mean that other partner can do competing business to the prejudice of the partnership or venture and when objected to share the profits earned out of the said business in rivalry. The result of permitting other partners to do rivalry business just cannot be compensated in terms of money and/or sharing of profits. Such competing/rival business without written permission or contract will definitely cause damage to the purpose and object of the Joint Venture or Partnership. There are always various sorts of strategies in doing business. The parties jointly ventured and come together to establish a particular business. They proceed accordingly jointly with full cooperation. The concerned market/business the commerce trade also based upon various practice and strategies which just cannot be overlooked in this era of global and competitive market/ business. If both the parties decide and agree a business can be done orally or even without written communication. But when both the parties decide to flight, then any number of clauses in written documents are not sufficient to settle the dispute. Therefore, having once agreed and decided to do a particular business and project jointly and in fact acted accordingly with clear understanding trust any one partner or person cannot be allowed to do the rival or competing business being part and partner of the company/firm only because there is no negative covenant. In Court view it is permissible to do rival and or competing business if agreed specifically by the parties and if any partner is doing such rival business without written permission and/ or consent from the other partner, the Company/firm or the affected partner is entitled to seek injunction/relief or interim measure.
It is settled law that Section 9 of the Arbitration Act need to be read with Order 39, Rules 1 and 2 of Code of Civil Procedure (CPC) and the provisions of the Specific Relief Act while considering to grant interim measure/protection pending arbitration.
Considering the rival submissions so raised including the pleadings and the material placed on record at this prima facie stage Court have granted ad interim injunction on 16.10.2009 in terms of prayer clause (a).
1. The Petitioner has invoked Section 9 of the Arbitration and Conciliation Act, 1996 (for short, Arbitration Act) for the following prayer:-
a) this Hon’ble Court be pleased to grant an interim measure of protection by way of an interim injunction restraining the Respondent by itself and/or through its agents and/or servants from or in any manner distributing Verona.
2 Admittedly, there is an Arbitration clause in Joint Venture Agreement (for short, JVA) dated 22nd April, 1998, which reads thus“
13.10 Any dispute arising out of or in connection with this Agreement or any Related Agreement shall be resolved by the Parties in the following manner:
(a) Any Party may initiate resolution of such controversy by providing to the other Parties a brief and concise statement of the initiating Party’s claims, together with relevant facts supporting them, and referring to this Section 13.10 (a). For a period of sixty (60) days from the date of such statement, or such longer period as the Parties may agree in writing, the Parties shall make good faith efforts to settle the dispute. Such efforts shall include without limitation, full presentation of theParties’ respective positions before the respective chief executive officers of their respective companies. Any Party may in its sole discretion elect to be assisted by counsel in such presentation.
(b) In the event the Parties are unable to reach accord using the procedures specified in paragraph (a) above, such dispute shall be finally settled without recourse to the courts, in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, by one or more arbitrators designated in conformity with those Rules. Arbitration shall be held in London, England. Either Party may ask the competent tribunal to confirm an arbitration award or otherwise provide that it shall be enforceable.”
3 Considering the scope and purpose of Section 9 of the Arbitration Act and if the case is made out, then whether perpetration stages as provided under the clause were complied with or not that can be gone into at the later stage. The basic requirement of existence of the arbitration agreement and the dispute between the parties arising out of the same, in my view, is sufficient to consider the case of the Petitioner for urgent relief.
4 As per the respondent, prior to 1989, Rabipur, an ant - rabies vaccine, and therefore a life saving drug, was manufactured by a company known as Behringwerke (a constituent of the Hoechst Group), and was exclusively imported and marketed in India, Nepal, Bangladesh, Sri Lanka (“the HMR Territory”), by the Respondent (then known as Hoechst India Limited). The Respondent established and developed, at huge cost, the marketing network, which is specially required in order to market and distribute an anti rabies vaccine. As of February 2009 this network consisted of about 350 medical represent at vies and channel sales executives who had reached out to over 46,000 general medical practitioners and 11,000 A Class Pharmacy Retailers every month. In addition thereto the Respondent has appointed 2,000 distributors to distribute Rabipur along with the Respondent’s other brands. The Respondent has also established a “Cold Chain” that is specially required for the storage and transportation of an anti rabies vaccine, which includes special facilities such as walk in coolers at all its 27 C & F locations, to store the vaccines temperatures between 2 deg. Centigrade and 8 deg. Centigrade, and refrigerated vans for transporting the vaccines.
5 In 1989, the Respondent established a manufacturing facility at Ankles war, Gujarat to Rabipur, for manufacturing and production of Rabipur in India. The Rabipur, ant rabies vaccine, manufactured at the aforesaid undertaking, was distributed and marketed in India by Respondent till February 2009.
6 In February, 1996, the vaccine business of Behringwerke (including that of Rabipur vaccine) was transferred
