Calcutta High Court
Vvf (India) Ltd vs Jyothy Laboratories Ltd on 9 October, 2013
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
AP No.1016 of 2013
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
VVF (INDIA) LTD.
Versus
JYOTHY LABORATORIES LTD.
BEFORE:
The Hon'ble JUSTICE SANJIB BANERJEE
Date : 9th October, 2013.
Appearance:
Mr. S. N. Mookherji, Sr. Adv.
Mr. Abhrajit Mitra, Adv.
Mr. Sarvapriya Mukherjee, Adv.
..for the petitioner
Mr. Anindya Mitra, Sr. Adv.
Mr. P. Sinha, Adv.
Mr. Anirban Roy, Adv.
..for the respondent
The Court : The petitioner seeks to enforce a negative covenant contained in a sale and purchase agreement of December 21, 2009 between the predecessor-in-interest of the respondent and the predecessor-in-interest of the petitioner. The agreement of 2002 was executed by Henkel India Limited and VVF Limited and contains the following negative covenant at clause (4) under Article 4 thereof:
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"During the first ten (10) years following the Commencement Date or as specifically agreed thereafter HENKEL shall not procure the Products listed in Annex C from any source other than VVF provided however that, VVF (i) has adequate capacity to manufacture the Products; and (ii) VVF is capable of delivering the Products within the agreed time lines as per the quantities demanded by HENKEL. The Parties hereby agree that if VVF does not have the capacity to deliver the Products as agreed above then the above exclusivity obligation will stand annulled and HENKEL shall have a right to seek the Products from any source other than VVF."
The products listed in Annexure 'C' to the agreement are Margo Soap, Fa Soap and Neem Toothpaste. The petitioner says that notwithstanding the petitioner not being entitled to specifically enforce the agreement or the other terms thereof, the petitioner is entitled to an injunction restraining the respondent from allowing any other party to manufacture the products listed in Annexure 'C' to the agreement.
Several grounds, primarily technical in nature, have been urged on behalf of the respondent. To begin with, the respondent contends that the present petition under Section 9 of the Arbitration and Conciliation Act, 1996 is not maintainable since there is no arbitration agreement between the parties. The respondent refers to the agreement and the parties thereto and, in particular, to the parties being limited only to their successors and permitted assigns. According to the petitioner, since the respondent herein has neither accepted the terms and conditions of the sale and purchase agreement nor the arbitration clause contained therein, the disputes between the parties may not be 3 arbitrable. The respondent also refers to Clause 22(1) of the agreement that provides that the agreement "is personal to the parties and shall not be assignable by either party without the prior written consent of the other..." The respondent suggests that notwithstanding the conduct of the respondent or whatever representation may have been made by the respondent to the petitioner or any authority, if the agreement requires the rights and obligations thereunder to be personal to the parties and not capable of assignment except by a writing, the negative covenant cannot be enforced against the respondent in the absence of a writing evidencing the assignment of the agreement.
In such context, the respondent has referred to a judgment reported at (1999) 2 SCC 37 and another reported at 2008(2) CHN 689.
On the question of balance of convenience, it is submitted on behalf of the respondent that the respondent's business in respect of its three valuable marks would be completely stopped if an injunction in aid of the negative covenant is passed. The respondent claims that since the petitioner is free to manufacture products of others at either manufacturing facility of the petitioner, the respondent should not be forced to have its valuable products manufactured at the petitioner's facility in the wake of the serious disputes between the parties.
Henkel India Limited, the original owner of the trademarks in the three products listed in Annexure 'C' to the agreement, has apparently been taken over by the respondent herein and company Henkel India Limited has merged into Jyothy Laboratories Limited. VVF Limited, the predecessor-in- interest of the petitioner, was demerged into two entities with the petitioner 4 herein being one of the entities. Subsequent to the demerger of VVF Limited and the petitioner being incorporated and carrying on the demerged business of VVF Limited, the respondent recognised the petitioner's rights under the agreement of December 21, 2009, inter alia, by issuing a letter to the Drugs Controller in Himachal Pradesh, asserting therein that Jyothi Laboratories Limited had authorised VVF India Limited "to use the said trademark Margo for manufacturing toilet soaps and natural moisturizer soap and accordingly VVF (India) Limited have applied for manufacturing license under the Drugs & Cosmetics Act and Rules in the State of Himachal Pradesh."
There may not be any express consent in writing issued by the respondent in terms of Clause 22(1) of the agreement of December 21, 2009, but the undated letter issued to the Drugs Controller, a copy whereof appears at pages 530-531 of the petition, is as close to an acknowledgment of the assignment or the acceptance thereof as may be relevant at the ad interim stage.
The several issues that have been raised by the respondent need consideration, including as to whether the parties herein are bound by the arbitration clause contained in the agreement of December 21, 2009. But, prima facie, it is possible to regard both the petitioner and the respondent herein as the successors of the original parties to the agreement of December 21, 2009.
Affidavits are called for. Affidavit-in-opposition be filed as soon as possible and on the reopening day after the puja vacation; reply thereto, if any, may be filed within a week therefrom so that the matter is ready for hearing after affidavits on November 15, 2013.
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There will be an order of injunction restraining the respondent whether by itself or by its servants or agents or assigns or otherwise howsoever from allowing any person other than the petitioner to manufacture the products listed in Annexure 'C' to the agreement of December 21, 2009 without the previous leave of Court.
The respondent seeks a stay of operation of this order which is declined.
Certified website copies of this order, if applied for, be urgently supplied to the parties subject to compliance with all requisite formalities.
(SANJIB BANERJEE, J.) bp/sg.