New Delhi: The Delhi high court on Monday stayed the immediate restoration of a sub-licence agreement between Monsanto Technology LLC and Nuziveedu Seeds Ltd regarding the use of the former’s patented Bt cotton technology.
The court was hearing Monsanto’s appeal against a single-judge order which had ruled that Monsanto’s termination of its sub-licence agreement with Nuziveedu Seeds was illegal and arbitrary.
A division bench headed by justice S. Ravindra Bhat directed the parties to file their written submissions and held that the appeal would be heard in a timely manner.
Opposing the impugned order of 29 March, Kapil Sibal, counsel for Monsanto, said, “The court cannot give a direction asking for restoration of a contract that was terminated by me.”
Under the March order, 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 further held that Monsanto had 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 the agreement, making Monsanto’s termination of the agreement illegal and arbitrary.
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.