Win for Bayer Monsanto as Bombay HC orders NSL to pay Rs 138 crore dues

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Updated: March 7, 2019 3:06:39 PM

Bombay High Court on Wednesday ordered Nuziveedu Seeds to deposit its dues to the innovator company in two weeks.

Affirming a January 2019 arbitral award that favoured Bayer, the court also restrained the local firm from disposing of any of its assets till the money is deposited with it either in cash or via bank guanatee.

By BV Mahalakshmi & Prabhudatta Mishra

The protracted legal battle between global biotech major Bayer Monsanto and the local companies, which had licensed in its genetically modified cotton (Bollgard technology), seems to be increasingly going the US-based firm’s way, with the Bombay High Court on Wednesday ordering Nuziveedu Seeds (NSL) to deposit its Rs 138 crore dues to the innovator company in two weeks. Affirming a January 2019 arbitral award that favoured Bayer, the court also restrained the local firm from disposing of any of its assets till the money is deposited with it either in cash or via bank guarantee.

For Bayer (which operates in India via its local arm Mahyco-Monsanto Biotech or MMB), this is the third legal victory in the current calender year against a clutch of firms and other groups disputing its patent rights on the relevant technology and refusing to pay it the trait fees (royalty) agreed upon. Apart from the arbitral award and Wednesday’s court riling, on January 8, the Supreme Court had restored Bayer’s BT cotton patent in India till its validity is decided finally by a lower court hearing the technical matter in detail.

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When it comes to raising revenue from the sub-licencees here, the biotech major’s hands are however still tied as these firms no longer require annual NoCs from it to sell seeds bearing its technology. Bayer is also hit by the price controls (including sub-limits on the trait fee) imposed by the Indian government on the Bt cotton seeds.

According to the December 2015 seed price control order issued by the agriculture ministry, the maximum sale price of the widely-used Bollgard II variety of Bt cotton seeds for the 2018-19 kharif season is Rs 740 (inclusive of trait value of Rs 39) for a 450-gm packet. Before the Centre capped retail price of the Bt cotton seed, its price was in the range of Rs 830-1,000/450-gram packet, as existed in 2015-16 kharif season.

A Bayer spokesperson said on Wednesday’s HC order: “The dispute with NSL started in 2015, when a few sub-licensee seed companies unilaterally withheld the trait fees payable to MMB and refused to honor their contracts. While MMB has collaboratively resolved the dispute with most of the companies, only NSL and its group companies continue to dishonor contracts, withholding the mutually agreed trait fee even after collecting the same from farmers. MMB was compelled to initiate arbitration proceedings against NSL and its group companies to recover outstanding dues.”

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When contacted, an NSL official said, “Rs It is an appealable order. We are waiting to see the order to evaluate our options.’’

Before the SC restored it, Bayer’s patent was rendered non-enforceable in India by a division bench of the Delhi High Court in May 2018. The court had concurred with the government’s contention that, the patented gene, having been inserted into a plant, became a plant itself and ceased to be a patentable ‘product’ under the Patents Act. The Delhi HC’s two-judge bench also said Bayer could alternatively seek protection of its Bollgard-II technology, which helps the cotton plants resist the dreaded bollworm, under the Protection of Plant Varieties and Farmers Rights Act 2001 (which also entities the firm to trait fees but offers much less commercial scope).

While restoring a March 2017 trial court, the SC said the HC should have “confined itself to examination of the validity of the order of injunction granted by the single judge only” and should not have decided about the validity of Bayer’s patent. It remanded the suit to the single judge for disposal in accordance with law and asked parties to cooperate and facilitate the single judge in early disposal of the suit.

In view of all the problems being faced by it in India, Bayer has been going slow on its plans for the India market. It withdrew the herbicide tolerant cotton seeds from the approval process in India in August 2016.

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