2016 (4) TMI 918 - SC - Indian Laws

Arbitrial award - direction to the appellant to execute the deed of transfer and assignment - Held that - Direction contained in paragraph 7 of the PFA of the Arbitral Tribunal was duly carried out by the appellant based on the first request of the respondent themselves as made on 19.1.2012 and as per the modified request dated 3.4.2012. If that was the real fact situation in regard to the execution of the transfer deed, which was completely omitted to be noted by the learned Single Judge, it must be held that there was no occasion for the respondent to have any grievance in regard to the execution of the transfer deed as directed in paragraph 7 of the PFA of the Arbitral Tribunal dated 23.12.2011. The failure on the part of the learned Judge in having noted the fact that the transfer deed dated 4.4.2012 was as per the re-draft forwarded by the respondent themselves which was duly executed and sent back by the appellant by 9.4.2012 and the original by 12.4.2012 unfortunately resulted in the passing of the impugned order. In the light of the said patent illegality in the impugned order, the same is liable to be set aside.

Summary

Issues:
Enforcement of arbitration award for transfer of patents based on a License Agreement.

Analysis:
The case involved an appeal against an order in Execution Application No.643 of 2013 regarding the enforcement of an arbitration award dated 23.12.2011. The License Agreement between the parties provided for arbitration under the Rules of the Dutch Arbitration Institute. The dispute arose when the respondent sought to terminate the agreement, leading to the Arbitral Tribunal passing a Partial Final Award (PFA) on 23.12.2011, directing the transfer of certain Indian Patents to the claimant. The award was communicated to the parties on 27.12.2011, with a 30-day period for compliance starting from that date.

Subsequently, there were communications and discussions between the parties regarding the draft deed of transfer. The respondent forwarded a re-draft of the deed on 3.4.2012, which contained variations from the earlier draft, including changes in arbitration clauses and governing laws. The appellant executed the deed on 4.4.2012 and sent it to the respondent, who acknowledged the execution and requested the original document for further formalities.

However, the respondent later raised issues with the deed, leading to a legal dispute. The respondent filed an application before the High Court seeking enforcement of the PFA. The Single Judge directed the appellant to execute the deed as per the original draft forwarded by the respondent. The appellant challenged this order before the Supreme Court.

During the proceedings, it was revealed that the appellant had complied with the award by executing the deed based on the re-draft sent by the respondent. The respondent failed to act on the executed deed, causing the dispute. The Supreme Court held that the appellant had fulfilled its obligation as per the award, and the Single Judge's order was unwarranted. The Court noted that the final deed executed by the appellant was in line with the re-draft provided by the respondent, and the appellant had acted in accordance with the award requirements.

Consequently, the Supreme Court set aside the impugned order, ruling in favor of the appellant. The Court emphasized that the appellant had fulfilled its obligations under the arbitration award, and the respondent's failure to act on the executed deed did not justify the enforcement application.