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REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 4359-4360  OF  2016 [arising out of SLP(C) Nos.3134-3135 of 2015]

M/S. SHINHAN APEX CORPORATION   …APPELLANT VERSUS

M/S. EURO APEX B.V.                 …RESPONDENT

J   U  D  G   M   E   N   T

Fakkir Mohamed Ibrahim Kalifulla, J.

Leave granted.

1. These appeals are directed against the order  

dated 29.9.2014 in Execution Application No.643 of  

2013  in  Award  dated  23.12.2011  with  Chamber  

Summons No.832 of 2014.

2. To briefly note the facts, there was a Licence  

Agreement between the appellant and the respondent  

dated 22.2.1993 which provided for settlement of  

disputes by way of arbitration in accordance with  

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the Rules of the Dutch Arbitration Institute. The  

said agreement was sought to be terminated by a  

notice  by  the  respondent  on  12.3.2007.  The  

termination was to take effect from 23.02.2008.  

The dispute went before the Arbitral Tribunal. On  

11.6.2008, the appellant filed an application for  

registration  of  Patent  Nos.10-0865115  and  

100909490  in  the  United  States  as  well  as  in  

India.  In  the  arbitral  proceedings,  a  Partial  

Final Award (for short, PFA) came to be passed by  

the  Arbitral  Trinunal  on  23.12.2011.  We  are  

presently  concerned  with  the  Indian  Patents  in  

which  the  appellant's  rights  and  interest  were  

involved,  namely,  Patent  Nos.  2143/MUM/2008  and  

2144/MUM/2008.  The  relevant  part  of  the  award  

(viz) paragraphs 7 and 9, of the PFA reads as  

under:-

“7.  Respondent  to,  within  30  days  following  the  notification  of  the  arbitration award, unconditionally and  irrevocably, fully transfer all rights  

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and  interests  of  Indian  Patent  No.2143/MUM/2008  and  2144/MUM/2008  to  Claimant,  or  a  company  designated  by  Claimant, and sign/execute and submit,  at the first request of Claimant, and  within 3 days following such request,  all the documents that are required to  effect such patent rights and interests  transfer  in  accordance  with  the  requirements of the Indian Patent Act  and  applicable  Indian  laws;  and  to  simultaneously  provide  copies  of  all  the relevant correspondence relating to  such  transfer  to  the  attorney  of  Claimant  by  fax  and  registered  post  (fax: +31-20-6513001, HIL International  Lawyers & Advisers, PO Box 22678, 1100  DD Amsterdam, the Netherlands);

8.  xxx    xxx xxx 9.  Respondent  to  pay  a  direct  enforcement  penalty  in  the  amount  of  Euro  50,000  for  each  case  in  which  Respondent  infringes  the  arbitral  orders  sub  7  and  8  above,  and  Euro  5,000  for  each  day  the  infringement  continues;”

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3. The Award dated 23.12.2011 was communicated to  

the  parties  by  the  Arbitral  Tribunal  on  

27.12.2011.  Therefore, the period of thirty days,  

fixed  in  paragraph  7,  was  to  start  from  

27.12.2011.  

4. Closely  followed  by  that,  the  respondent  

forwarded its request dated 19.1.2012 in the form  

of a letter communicated by the Advocate of the  

respondent  to  the  appellant  by  enclosing  the  

required documents to be executed by the appellant  

for the purpose of transfer of the patents.  In  

the opening paragraph of the draft transfer deed a  

reference was made to PFA rendered on 23.12.2011  

of  CASE  NAI  3625,  in  order  to  ascertain  the  

obligation  of  the  appellant  to  execute  the  

transfer of the patents. It is not in dispute that  

subsequent to the said letter dated 19.1.2012 and  

the  enclosures,  discussions  were  held  between  

January and March, 2012 among the advocates of the  

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appellant and the respondent to finalize the draft  

deed of transfer.  

5. Thereafter,  again  at  the  instance  of  the  

respondent through a communication dated 3.4.2012  

of  the  respondent's  lawyers  addressed  to  the  

appellant a re-draft of the deed of transfer was  

enclosed, which was dated 4.4.2012. In the opening  

part of the said Deed, the reference to PFA, which  

was mentioned in the earlier draft transfer deed,  

was omitted. In other respects, the draft remained  

the  same  which  contained  a  clause  under  the  

caption 'Consideration' to the effect, “Pursuant  

to  the  above,  the  Parties  agree  that  the  

consideration  for  the  sale  and  transfer  of  the  

patent  and  the  patent  rights  shall  be  US$  1  

(United States Dollar One), receipt of which is  

hereby acknowledged”.

6. That apart, in clause 5.5 of the re-draft it  

was  mentioned  that  arbitration  of  the  dispute  

arising  out  of  or  in  connection  with  the  deed  

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should  be  initially  settled  under  the  Rules  of  

Singapore  International  Arbitration  Centre  by  a  

Sole Arbitrator appointed in accordance with the  

said  Rules  and  the  proceedings  should  be  in  

English  and  the  seat  of  arbitration  should  be  

Singapore.  Insofar  as  the  said  clause  was  

concerned,  the  same  was  different  than  the  one  

which was contained in the earlier draft, as per  

which the arbitration was to be carried out with  

the  Rules  and  provisions  by  Netherlands  

Arbitration  Institute  and  the  venue  of  the  

arbitration  as  Hague,  The  Netherlands  and  

governing law was also mentioned as the laws in  

force  in  the  Netherlands  and  the  Courts  at  

Netherlands  to  have  jurisdiction.  In  the  draft  

dated 4.4.2012 the governing law was to be the  

laws in force in India.  

7. The appellant received the re-draft by way of  

e-mail  on  3.4.2012  with  a  direction  to  the  

appellant to sign the document, get it legalized  

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by the Indian Embassy in Seoul and dispatch the  

same  to  the  respondent's  lawyers  in  Amsterdam.  

The appellant executed the deed of transfer dated  

4.4.2012 and thereby transferred all its rights  

and interests in the Indian Patents in favour of  

the respondent. The appellant's lawyers sent an  

electronic  copy  of  the  said  document  to  the  

respondent duly notarized with an assurance that  

the original would be promptly couriered to the  

respondent upon confirmation.  In response to the  

same, the lawyers of the respondent in their e-

mail dated 11.4.2012 intimated that the signature  

part of the deed was correctly executed by the  

appellant and also wanted the original deed to be  

sent  by  courier  to  their  Amsterdam  Office  for  

carrying  out  other  additional  formalities  for  

effecting  the  transfer.  Simultaneously,  their  

lawyers  also  on  the  same  day  informed  the  

respondent  confirming  the  forwarding  of  the  

transfer deed for effecting the transfer of the  

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patent applications duly signed by the appellant.  

The original document was also forwarded to the  

lawyers of the respondent on 12.4.2012.  

8. However, it appears that the respondent had  

its  own  issue  with  its  lawyers  as  regards  the  

draft as well as the final deed executed by the  

appellant in favour of the respondent which came  

to light when the present proceedings before the  

High Court was launched by the respondent.  The  

same  was  reflected  in  the  communication  dated  

12.4.2012 addressed by the representative of the  

respondent to its lawyers.  Thereafter, the next  

communication  was  dated  3.12.2012  by  the  

respondent's lawyer addressed by way of an e-mail  

to  the  appellant's  lawyer  suggesting  that  the  

transaction can be by way of trade sale of the  

appellant's business. On behalf of the appellant,  

its lawyer sent a reply dated 11.12.2012 taking  

the definite stand that after the execution of the  

transfer deed dated 4.4.2012 the requirement of  

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the obligation to be fulfilled by the appellant  

was  duly  complied  with  as  per  the  PFA  dated  

23.12.2011.  Thereafter, by another communication  

dated 15.3.2013, the respondent's lawyers sent a  

fresh e-mail to the appellant's lawyers informing  

that  fresh  steps  are  required  to  be  taken  to  

arrive at a final settlement of disputes.  The  

said  e-mail  was  also  replied  on  behalf  of  the  

appellant on 20.3.2013 wherein the respondent was  

reminded as to the confirmation of the steps taken  

based on the transfer deed executed by them.  For  

the first time, on 8.6.2013, by way of e-mail at  

the instance of the respondent's lawyers it was  

intimated  that  respondent  was  not  willing  to  

accept the transfer of Indian Patents based on the  

language used in the draft deed as signed by the  

appellant.  The said e-mail was also duly replied  

on behalf of the appellant on 15.6.2013 pointing  

out that the deed was executed as per the draft  

forwarded to the respondent by their lawyers and  

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consequently  the  appellant  was  not  in  any  way  

liable  for  either  any  delay  or  for  the  terms  

contained in the transfer deed.

9. It  was  in  the  above-stated  background  the  

present  application  came  to  be  filed  by  the  

respondent on 8.7.2013 before the High Court of  

Bombay for the enforcement of paragraph 7 of the  

PFA dated 23.12.2011.  By the impugned order, the  

learned  Single  Judge  held  that  there  was  a  

material alteration in the draft deed forwarded by  

the  respondent  to  the  appellant  when  the  final  

deed was executed in the deed dated 4.4.2012 and  

consequently, the appellant is bound to execute a  

transfer deed of assignment as per the draft sent  

by the award holder, namely, the respondent as was  

originally forwarded to the appellant.

10. With that view, the learned Judge directed the  

appellant  to  execute  the  deed  of  transfer  and  

assignment  of  Patent  Nos.  2143/MUM/2008  and  

2144/MUM/2008  in  favour  of  the  award  holder  in  

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terms of Annexure P6 to the Execution Application  

incorporating therein the complete recital 'B' and  

the  Arbitration  Clause  5.5  showing  the  future  

arbitration in Netherlands within two weeks from  

the date of the order.  Aggrieved by the impugned  

order, the appellant is before us.

11. We heard Mr. K.V. Vishwanathan, learned senior  

counsel appearing for the appellant and Mr. Manoj  

K.  Singh,  learned  counsel  appearing  for  the  

respondent.

12. Having  drawn  our  attention  to  the  above  

factual details which emanated after the passing  

of PFA dated 23.12.2011, Mr. Vishwanathan, learned  

senior  counsel,  contended  that  when  the  

application  was  initially  moved,  the  respondent  

failed to bring to the notice of the Court about  

the  extensive  correspondence  which  took  place  

between 19.1.2012 and 15.6.2013, that after the  

appellant in its Chamber Summons brought to the  

notice  of  the  Court  the  relevant  information,  

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namely,  the  re-draft  sent  by  the  respondent  on  

3.4.2012 which contained the variation in para 'B'  

as between the one contained in the earlier draft  

of  19.1.2012  and  3.4.2012  as  well  as  the  

arbitration clause and the governing law contained  

in paragraphs 5.5 and 5.6, the respondent for the  

first time in their rejoinder referred to those  

documents.  The learned senior counsel pointed out  

that learned Judge completely omitted to take note  

of such relevant factors and proceeded to hold as  

though  the  draft  sent  by  the  respondent  on  

19.1.2012 alone was material and that the changes  

found in the final deed dated 4.4.2012 was at the  

instance of the appellant which unfortunately led  

to the passing of the impugned order.

13. In reply, Mr. Singh, learned counsel appearing  

for the respondent, was not able to controvert the  

factual position, namely, that the first request  

of the respondent after the PFA dated 23.12.2011  

was  19.1.2012,  that  along  with  the  said  

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communication  the  draft  deed  of  transfer  to  be  

executed  by  the  appellant  was  forwarded  to  it,  

that  after  detailed  discussions  between  January  

and March, 2012, the re-draft was forwarded by the  

respondent on 3.4.2012 wherein the reference to  

PFA in the opening paragraph of the earlier draft  

was omitted and that the paragraphs relating to  

consideration was specified apart from the change  

about the venue and the applicable Rules of the  

Arbitral Tribunal was noted as Singapore instead  

of Netherlands and the governing law applicable  

was  also  changed  from  Netherlands  to  India.  

Learned counsel was also not able to controvert  

any  of  the  other  subsequent  correspondence  

exchanged between the appellant and the respondent  

between 11.4.2012 and 15.6.2013.

14. Having regard to the said development which  

had  taken  place  after  the  PFA  dated  23.12.2011  

which discloses that the appellant did not commit  

any default in complying with the direction of the  

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said Award and, therefore, the present direction  

of the learned Judge in the impugned order was  

wholly unwarranted.  If the respondent failed to  

act based on the final transfer deed executed by  

the appellant on 4.4.4012, which was in tune with  

the draft forwarded by the respondent themselves,  

the appellant cannot be in any way blamed for the  

misfeasance committed by the respondent.

15. In  the  above-stated  background,  when  we  

consider the prayer of the respondent as claimed  

in the application, the prayer was for a direction  

to the appellant to execute the deed of transfer  

and assignment of Patent Nos. 2143/MUM/2008 and  

2144/MUM/2008 in favour of the respondent in terms  

of the draft deed in Annexure P6, which was dated  

4.4.2012.  In fact the learned Judge,  as rightly  

pointed out by Mr. Vishwanathan, learned senior  

counsel for the appellant, completely missed to  

note that based on the correspondence exchanged  

between the respondent and the appellant between  

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19.1.2012 and 3.4.2012 Annexure P6 which was dated  

4.4.2012 was the ultimate transfer deed which the  

appellant  was  obliged  to  execute,  that  the  

appellant  duly  executed  the  said  document  by  

signing the same on 4.4.2012 and forwarded to the  

respondent's  lawyers  on  9.4.2012  and  the  due  

execution of which was also confirmed on behalf of  

the respondent by their lawyers on 11.4.2012.  A  

further confirmation was made by the respondent's  

counsel to the respondent themselves on the same  

day, i.e. 11.4.2012 as to the execution of the  

transfer  deed  dated  4.4.2012.   The  original  

documents were also forwarded by the appellant on  

12.4.2012. After the above referred sequence of  

events as regards Annexure P6 dated 4.4.2012 are  

noted,  it  must  be  held  that  the  direction  

contained  in  paragraph  7  of  the  PFA  of  the  

Arbitral  Tribunal  was  duly  carried  out  by  the  

appellant  based  on  the  first  request  of  the  

respondent themselves as made on 19.1.2012 and as  

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per the modified request dated 3.4.2012. If that  

was  the  real  fact  situation  in  regard  to  the  

execution  of  the  transfer  deed,  which  was  

completely  omitted  to  be  noted  by  the  learned  

Single Judge, it must be held that there was no  

occasion for the respondent to have any grievance  

in regard to the execution of the transfer deed as  

directed in paragraph 7 of the PFA of the Arbitral  

Tribunal dated 23.12.2011. The failure on the part  

of the learned Judge in having noted the fact that  

the transfer deed dated 4.4.2012 was as per the  

re-draft  forwarded  by  the  respondent  themselves  

which  was  duly  executed  and  sent  back  by  the  

appellant  by  9.4.2012  and  the  original  by  

12.4.2012 unfortunately resulted in the passing of  

the  impugned  order.  In  the  light  of  the  said  

patent illegality in the impugned order, the same  

is liable to be set aside.

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16. In the said circumstances, the impugned order  

of the learned Judge cannot be sustained, the same  

is set aside and the appeals stand allowed.

................................J. [Fakkir Mohamed Ibrahim Kalifulla]

................................J. [S.A. Bobde]

New Delhi; April 22, 2016

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