Monsanto termination of Nuziveedu Seeds sub-licence pact illegal: Delhi HC
New Delhi: The Delhi high court on Tuesday ruled that Monsanto Technology LLC’s termination of its sub licence agreement with Nuziveedu Seeds Ltd was illegal and arbitrary.
The court reinstated the agreement, but said the royalty or trait fee payable for the use of Monsanto’s patented Bt cotton technology would be as per government stipulations.
“The parties shall remain bound by their respective obligations under the terms and conditions of the 2015 Sub-License Agreements,” the court said in its 96-page verdict.
Monsanto Inc., through its Indian arm Mahyco-Monsanto Biotech Ltd sued Nuziveedu Seeds and its subsidiaries, Prabhati Agri Biotech Ltd and Pravardhan Seeds Pvt Ltd last year for allegedly continuing to sell seeds using its patented technology despite termination of its sub licence agreement in November 2015.
The court said that Monsanto has failed in its duty to consider Nuziveedu’s request to change the trait fee under the 2015 licence agreement. Accordingly, Monsanto did not hold up its end of the contractual obligation and charged a trait fee higher than allowed under Indian laws at the time, the court noted.
In such a situation, the court said, Nuziveedu could not have breached their agreement, making Monsanto’s termination of the agreement illegal and arbitrary.
The court also directed the sub licence agreement to be modified according to the format of the GM Technology (GM Trait) Licensing Agreement prescribed under the Licensing and Formats for GM Technology Agreement Guidelines, 2016 issued by the government.
The notification was issued on 18 May last year by the agriculture ministry but withdrawn within a week following criticism from biotech companies that it would stifle innovation.
While Nuziveedu welcomed the ruling, Monsanto declined comment.
“We are yet to receive a copy of the order and will only be able to comment once we study the same in its entirety,” said a Monsanto spokesperson.
“Tuesday’s court order and earlier observations by the Government and the Competition Commission of India proves our point that Monsanto has abused it’s dominant position in the Bt Cotton (seed) market,” said M. Prabhakar Rao, chaiman and managing director of Nuziveedu Seeds.
“It charged domestic seed companies over and above government stipulated trait fees and must now refund it to us. Monsanto owes just our companies Rs800 crore,” he added.
The government in 2015 notified a cotton seed price control order following which it reduced royalties on Bt Cotton seeds by 74%—from Rs163 to Rs43 (excluding taxes) per packet. It has maintained a status quo on prices and royalties for the 2017-18 crop season.
Monsanto has challenged provisions of the price control order—allowing the government to determine trait or royalty fees—at the Delhi High Court in a separate case. The court is still hearing it.
Justice R.K. Gauba in his verdict on Tuesday also clarified that a default of the court’s orders by Nuziveedu Seeds will bar it from using the “patent or trademarks” of Monsanto.