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2020 (7) TMI 843 - HC - Law of Competition


Issues Involved:

1. Jurisdiction of the Arbitral Tribunal under the Arbitration and Conciliation Act, 1996.
2. Applicability of the Competition Act, 2002 to the 2015 Sub-License Agreement (SLA).
3. Arbitrability of disputes involving competition law issues.
4. Validity and enforceability of the 2015 SLA under the Competition Act.
5. Impact of pending proceedings before the Competition Commission of India (CCI) on arbitration proceedings.
6. Whether the arbitral tribunal should have stayed or dismissed the proceedings pending the outcome of the CCI proceedings.
7. Whether the arbitral tribunal could decide the monetary claims under the 2015 SLA.
8. Whether the arbitral tribunal's decision was influenced by the interim orders of the CCI.
9. The impact of state government notifications on the trait value payable under the 2015 SLA.
10. Whether the arbitral tribunal's award was in violation of public policy or contained patent illegality.

Detailed Analysis:

1. Jurisdiction of the Arbitral Tribunal:

The arbitral tribunal's jurisdiction was challenged under Section 16 of the Arbitration and Conciliation Act, 1996. The tribunal applied the triple test of jurisdiction: existence of a valid arbitration agreement, proper constitution of the tribunal, and whether the matters submitted were within the scope of the arbitration agreement. The tribunal found that these criteria were met, and thus it had jurisdiction to decide the monetary claims under the 2015 SLA. The tribunal also noted that the CCI did not have jurisdiction to award monetary claims, which were within the purview of the arbitral tribunal.

2. Applicability of the Competition Act to the 2015 SLA:

The tribunal held that the question of whether the Competition Act applied to the 2015 SLA was to be decided by the CCI. The tribunal refrained from expressing any opinion on issues related to the Competition Act, such as abuse of dominance or anti-competitive agreements, as these were within the exclusive jurisdiction of the CCI.

3. Arbitrability of Competition Law Issues:

The tribunal concluded that while issues of competition law were not arbitrable, the monetary claims under the 2015 SLA were arbitrable. The tribunal differentiated between rights in personam, which are arbitrable, and rights in rem, which are not. The monetary claims were considered rights in personam.

4. Validity and Enforceability of the 2015 SLA:

The tribunal found that the 2015 SLA was not declared void by any competent authority and thus was presumed valid. The tribunal noted that any declaration of voidness under the Competition Act would have to be made by the CCI, and until such a declaration, the SLA was enforceable.

5. Impact of Pending CCI Proceedings:

The tribunal held that the pending proceedings before the CCI did not oust its jurisdiction to decide the monetary claims. The tribunal noted that the CCI's proceedings and the arbitration proceedings could proceed in parallel as they addressed different issues.

6. Stay or Dismissal of Proceedings:

The tribunal rejected the argument that it should have stayed or dismissed the arbitration proceedings pending the outcome of the CCI proceedings. The tribunal emphasized that doing so would leave the respondent without a remedy, as the CCI could not award monetary claims.

7. Decision on Monetary Claims:

The tribunal decided the monetary claims based on the contractual obligations under the 2015 SLA. It found that the petitioner had collected the trait value from farmers and was obliged to pay the respondent as per the agreement. The tribunal's decision was based on the interpretation of the contract and the evidence presented.

8. Influence of CCI Interim Orders:

The tribunal noted that the interim orders of the CCI were administrative and did not determine the rights or obligations of the parties. The tribunal held that these interim orders did not bind it or influence its decision on the monetary claims.

9. State Government Notifications:

The tribunal found that the state government notifications did not fix the trait value but only the maximum sale price. The tribunal held that the contractual trait value under the 2015 SLA was not contrary to these notifications.

10. Public Policy and Patent Illegality:

The tribunal's award was challenged on the grounds of public policy and patent illegality. The court found no evidence of such violations. The tribunal's decision was based on a plausible interpretation of the contract and the evidence, and thus did not warrant interference under Section 34 of the Arbitration Act.

In conclusion, the court dismissed the petitions challenging the arbitral award, upholding the tribunal's jurisdiction and decision on the monetary claims under the 2015 SLA. The court found no merit in the arguments related to the applicability of the Competition Act, the impact of CCI proceedings, or the alleged public policy violations.

 

 

 

 

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