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TMI Blog1990 (9) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time that if ultimately this court took the view that proceedings under the Act were not maintainable the petitioner would amend the petition to convert it into a one for suit for injunction. The question of maintainability of the petition was, Therefore, left open at that time. An interim order was made restraining the respondent either by itself or through its officers, servants and agents from manufacturing, selling or offering for sale or even advertising whether directly or indirectly in the preparations of Microbicidal Water-soluble ointment under the name of Wok dine containing " Polyvinylpyrrolidone " (PVP-I) conforming to Providence Ointment USP. It was, however, clarified in that order that otherwise there was no objection to the respondent using the trade mark "WORKDINE" for any other product or preparation. (3) I have heard arguments in detail on the application. With the question of grant of interim injunction was linked the question of maintainability of the petition itself. However, since the arguments on the maintainability of the petition were taking considerable time it was submitted by Mr. Rohtagi. learned counsel for the respondent that for the purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confidence by the respondent and shall be disclosed to no one outside title organisation of the respondent and even within its organisation only to those who needed to know the same. A condition was also imposed that in addition the respondent upon and after termination of the agreement shall nevertheless maintain the confidence and shall make no use of the same as well until the same shall become public knowledge (Clause 2). Other clauses of the agreement which are. relevant would be clause 27 putting a restraint on the respondent not to sell any preparation which included PVP-I or any derivatives thereof for a period of three years and clauses 34 and 35 relating to the applicability of laws and to the disputes being decided by arbitration. It will be appropriate to set out these three clauses as under: 27. While this Agreement is in force licensee shall add no preparation to its line of preparations which competes with the preparations and the product contained therein. Upon and after the termination of this agreement for any cause whatsoever licensee shall add no preparation to his line which includes the product or any derivatives thereof for a period of three (3) years foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "Betadine", "Isodine. ANNEX.III The product contained in the Preparations as set forth in the annexed Agreement shall be : Polyvinylpyrolidone-iodine". (7) The agreement was to commence on 25-8-1976, the date of the agreement itself and was to extend for a period of live years ending on 31st August, 1981. The agreement was to be automatically renewed thereafter for renewal terms of three years unless either party gave six months notice of its intention to terminate the agreement. In the normal course, Therefore, the agreement was to remain in force up to 31st August, 1990. However, by letter dated 9-2-1990 the petitioner gave six months notice to the respondent of its intention to terminate the agreement which was to expire on 31-8-1990. This notice it was stated was given in pursuance to clause 4 of the agreement aforementioned. On 31-5-1990 the petitioner wrote another letter to the respondent slating that it had come to its notice that the respondent had made enquiry of Gaf Chemicals Corporation for annotation for 2000-3000 kgs. of PVP-I. The petitioner, Therefore, drew attention of the respondent to clause 12(a) of the agreement that any purchase of PVP-I from any other par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x parte order was made an impression was sought to be created on this court that in spite of notice of termination of the agreement which was given on 9-2-1990 the respondent was going ahead with the purchase of PVP-I in breach of the agreement though the agreement itself W&E to expire on 31-8-1990. The documents brought on record by the respondent would show that this was not the position. The" goods being Mundidone brand of PVP-I which had arrived in India were in pursuance to the order placed by the respondent as far back as in January 1990 and the goods were shipped by Gaf directly at the instance of the petitioner. No grievance could be made, Therefore, that the respondent committed beach of the agreement before its expiry. (11) The grievance of the petitioner is that in breach of the terms of the agreement the respondent is coming out in the market for sale of preparations containing PVP-I as its ingredients in its trade name 'WOKADINE'. Dispute is, however, not relating to the use of the trade mark 'WOKADINE' which admittedly belongs to the respondent. The disputes which the petitioner wants to be referred to the arbitration have been set out in para 33 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd arrangement of artistic features of the labels, cartons, tubes in which the preparations had been earlier marketed by the respondent under the agreement with 'he petitioner. (13) The petitioner does not seek restraint on the respondent from using the trade mark 'Wokadine' of the respondent. As has been seen, the principal grievance is about the user of PVP-I in the preparations by the respondent either during the currency of the agreement or three years after that. Anticipating the defense that the restraint put on the respondent in the agreement would be hit by the doctrine of 'restraint of trade' being opposed to public policy, the petitioner filed an affidavit of Ms. Antoinette F Werner, a lawyer practicing in Switzerland. At the time this affidavit was sworn Ms. Werner was in India. She stated that she held a law degree from the University of Laussanne, Switzerland, and had been advising various Swiss Corporations on legal matters and was well acquainted with the business laws. She said- she 'had seen the agreement in question and that clause 27 of the agreement containing a prohibition to compete for the respondent during the license and three years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 'Betadine' of the petitioner .This again is not disputed. But the contention of the petitioner in effect is that formulations supplied by it to the respondent during the course of the subsistence of the agreement were confidential in nature and the respondent cannot be permitted to the use of PVP-I in the manufacture of its preparations as the respondent would be using the confidential nature of the information supplied by the petitioner. The respondent submitted that formulations are now a matter of public knowledge and in any case, it said that, it would not use formulation of the petitioner which it was using for the manufacture of 'Betadine' brand of preparations containing PVP-I though, according to the respondent these are no longer same. Nevertheless the respondent submitted that it will not use the formulations of the petitioner in its preparations using; PVP-I. It referred to various pharmacopoeias to justify its stand. Respondent also submitted that restraint put on it from the use of PVP-I in the manufacture of its various preparations as envisaged under the agreement would be hit by section 27 of the Indian Contract Act, 1872, which says every agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y certainly between these Rules and the provisions of the Act. Which would then prevail? All these and other questions were raised, but as noted above it was conceded by Mr. Rohtagi, learned counsel for the respondent that for the purpose of decision of the application he would accept the jurisdiction of this court as to the maintainability of the petition. I would say no more on this subject and leave all these questions to be decided while hearing the main petition. (17) Preparations containing PVP-I are widely being used all over the world. As noted above, petitioner itself is not the manufacturer of PVP-I. If reference is made to MARTINDALE-The Extra Pharmacopoeia (28th Edition), qualities of PVP-I are described and so are the preparations made from PVP-T. Proprietary preparations are also described therein and the name by which these are marketed in various countries. Extracts from US Pharmacopoeia would show various formulations containing PVP-I and as to how these are prepared and stored. BASF Company manufacturing PVP-I also gives all the details and so would the Eastern Pharmacist, August 1987 issue. In fact the petitioner itself has given various formulations in the docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his is sought to be introduced as opinion of an expert being relevant under section 45 of the Indian Evidence Act, 1972. Foreign law is no doubt a question of fact. The opinion of an expert on the subject has to be tested by cross-examination. When at an interim stage only an affidavit is to be relied upon this affidavit has to be complete in all respects. The affidavit must show the qualification and experience of the expert. It must state if the law on the subject is codified and must also refer to judicial precedents in support of his views. It may perhaps be said that if the law is codified, expert opinion is not necessary on the subject,. But sometimes in such cases also court would like to have the opinion of an expert as to what interpretation has been put on the law in the courts in the foreign country concerned. The opinion of the expert must be clear and cogent. I find the opinion of Ms. Werner on the question of foreign law quite obscure. It is more like a certificate. I will not, Therefore, take any notice of this affidavit. Thus, there is nothing on record to show as to what is the Swiss law on the subject of restraint of trade. (19) Various decisions both Indian and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es supporting the contract to show that the restraint was reasonably necessary to protect his interests and that once this onus was discharged, the onus of showing that the restraint was nevertheless injurious to the public was upon the party attacking the contract. The court also held that considerations against restrictive covenants were different in cases where the restriction was to apply during the period after the termination of the contract than those m cases where it was to operate during the period of the contract. The Supreme Court in this case was concerned with the negative covenants operative during the period of contract of employment when the employee was bound to serve his employer exclusively and in that case the court was of the view that such agreements were generally not regarded as restraint of trade and, Therefore, did not fall under section 27 of the Contract Act. In Superintendence Company of India (P) Ltd. v. Krishan Murgai, (1981)ILLJ121SC , the Supreme Court was again, concerned with restrictive laws in an agreement between the employer and employee. Two questions were raised in the appeal: 1) whether a post service restrictive covenant in restraint of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of trade.. and then : A contract in restraint of trade is one by which a party restricts his "future liberty to carry on his trade business or profession in such manner and with such persons as he chooses. A contract of this class is prima facie void, but it becomes binding upon proof that the restriction is justifiable in the circumstances as being reasonable from the point of view of the parties themselves and also of the community." and finally as. under :-- "Neither the test of reasonableness nor the .principle that the restraint being partial was reasonable is applicable to a case governed by Section 27 of the Contract Act, unless it falls within Exception 1. We, Therefore, feel that no useful purpose will be served in discussing the several English Decisions cited at the Bar. (21) In the present case before me the petitioner is quite aware of the fact that clause 27 is in restraint of trade inasmuch as it itself submitted that this clause was nevertheless valid according to Swiss laws and as noted above in support of this submission an affidavit of a lawyer practicing in Switzerland was filed. This clause may be good so far as during the currency of the agreement but i ..... 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