Agri Business

Bombay HC asks NSL to deposit ₹138 cr in MMBL-royalty issue

KV Kurmanath Rahul Wadke Hyderabad/Mumbai | Updated on March 06, 2019 Published on March 06, 2019

M Prabhakara Rao, head of Nuziveedu Seeds Ltd   -  REUTERS

Nuziveedu Seeds to go for appeal

The Bombay High Court on Wednesday asked the Hyderabad-based Nuziveedu Seeds Ltd (NSL) to deposit a sum of ₹138 crore in a case related to contentious dues it owes to Mahyco Monsanto Biotech Ltd.

MMBL sells Bt technology to cottonseed companies in the country under under sub-license agreements.

Delivering the order in the four-year-old issue, the court asked the seed major to deposit the amount either in cash or through bank guarantees within two weeks. The court also asked NSL not to dispose of off any of its assets till it deposits ₹138 crore towards payment of dues.

In trade parlance, NSL will have to pay trait fee, which is a fee charged for incorporating patented traits, which are added in cotton seed through genetic modification. In simpler terms, it is a fee for using the technology.

NSL to go appeal

The NSL has said that it is considering to appeal against the order. “It is an ad interim order to deposit ₹138 crore with the court and not with Monsanto. It is an appealable order. The company lawyers have advised us to go for an appeal,” M Prabhakara Rao, Chairman and Managing Director of NSL, has said, responding to the development.

Welcoming the order, a Bayer spokesperson said that the firm received a favourable award from an arbitral tribunal for recovery of certain dues from NSL in January 2019.

“We were compelled to initiate arbitration proceedings against NSL and its group companies to recover outstanding dues,” the spokesperson said.

In June 2018, Monsanto was fully acquired by Bayer.

The row

The dispute dates back to 2015 when NSL and several other seed makers stopped payment of trait fee on the Bollgard technology to Mahyco Monsanto Biotech Ltd (MMBL).

About 15 seed companies owed ₹450 crore to MMBL. Of these, all but NSL group companies agreed to settle for about ₹280 crore. The NSL group firms owed about ₹163 crore, a seed industry source said.

While most of the companies agreed to pay back the dues which ran into crores, NSL and its group companies have stuck to their stand and refused to pay.

They argued that they need not pay the royalty as the technology turned ineffective, leading to a legal between the two sides. The seed firms and the National Seed Association of India had questioned the validity of the sub-licence agreements. They alleged that the agreements were bad in law, anti-competitive and therefore should be considered void.

The seed firms and the association had argued that the company had no right to fix trait value and collect under such agreements from the farmers as the subject falls in the domain of PPVFR Authority (Protection of Plant Varieties & Farmers' Rights Authority).

A senior member of a larger textile industry association welcoming the order said that payment of trait fee is part of a contract and contract is sacrosanct. Therefore the order will boost the confidence of global bio-tech to licence new technologies in the country.

Published on March 06, 2019
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