Knorr Bremse AG of Germanyvs

Escorts Ltd of India

Description

• Knorr Bremse, a leading manufacturer of braking

systems for railway wagons and engines.

• It went and had an technology licensing

agreement with Escorts in 1977 which expired in

1995.

The case

• The German company alleged that Escorts has

used its technology even after the expiry of

agreement ……

Continued….• Both the company went through an agreement.

The agreement has two important clause …

Article1(3) states that Escorts needs to take approval of the German

company before exporting such breaking system.

Interestingly another clause states that

Article 1(5) states that even after the expiry of the agreement period, the

clause regulating Escorts export of breaking system manufactured with

Bremse technology would remain enforceable.

Continued…• Escorts claim that the clauses fall with in the purview

of section 27 of ICA and are therefore void and

illegal as they are contrary to section 27 of ICA.

• What section 27 of ICA says…

Agreement in restrain of trade void .Every agreement by which any one is restrained from exercising a lawful

profession, trade or business of any kind, is to that extent void.

Judgement• The judgment was passed by Justice RC Jain .The

Court, however, declined to grant interim injunction

to the German company against Escorts.

• The court held that even if the negative covenant

embodied in the clause of the agreement is valid

under German law, it cannot be enforced in India

and therefore injunction cannot be granted in

favour of the plaintiff

• And Escorts can carry on their export business….

Thank you by N.Manoraj