High Court stays restoration of Monsanto agreements with Nuziveedu Seeds

Order grants interim relief to Monsanto; both parties told to file submissions supporting their case

The Delhi High Court on Monday stayed a single-judge order restoring the sub-license agreements between Monsanto Technology LLC and Nuziveedu Seeds Limited for use of the American biotechnology major’s patented Bt cotton technology by the Indian seed manufacturer.

A division bench of Justice S Ravindra Bhat and Justice Yogesh Khanna passed the interim order in favour of Monsanto on an appeal against a March 28 order, which had held that the termination of its sub-license agreements with Nuziveedu was illegal and arbitrary in nature. In support of Monsanto’s claim, senior advocate Kapil Sibal on Monday said that the single judge could not pass a direction to restore inter-party contracts that had been terminated by one of the companies.

Siding with Sibal’s submissions, the court allowed Monsanto the initial relief and stayed the operation of the earlier order. The bench has asked both parties to file written submissions in support of their case, so that the matter can be heard in a timely manner.

“Today’s interim order by the division bench of the Hon’ble Delhi High Court validates our position that the sub-license agreements of Nuziveedu Seeds and its group companies stand terminated and cannot be restored or modified. In November 2015, Monsanto was forced to terminate the license agreements of Nuziveedu and its group companies due to their repeated refusal to pay contractually agreed upon amounts,” a Monsanto India spokesperson said.

Monsanto had earlier sued Nuziveedu (and its subsidiaries) for continuing to sell cotton seeds using the company’s patented Bt technology, even after the termination of the sub-licensing agreements in 2015. Rejecting the claim, the single judge had held that the sub-licensing agreements allowing Nuziveedu Seeds to use Monsanto’s genetically modified hybrid cotton seed technology still continued to be in force and binding on both parties.

The decision allowed Nuziveedu to continue to use Monsanto’s Bollgard and Bollgard II trademarks and had directed the sub-licensing agreements between the two companies to be modified as per the GM Technology Licensing Agreement found in the Licensing and Formats for GM Technology Agreement Guidelines, 2016.

The court had also held that all future royalty payments for the use of Monsanto’s patents were to be made as per the cotton seed price control order issued by the central government. The 2015 price control order reduces the cost of cotton seeds by 74 per cent, from Rs 163 to Rs 43 per packet (exclusive of taxes), which has been challenged by Monsanto in a separate case. The government has maintaining the same prices for the 2017-2018 cropping season as well.