Bombay High Court Sets Aside ₹75 Lakh Compensation Awarded Against Hersheys India In Jumpin Drink Manufacturing Dispute

A single bench of Justice Somasekhar Sundaresan, in an order made available on Monday, noted that the arbitral tribunal had categorically found that the contract between Hersheys and Kanti was never extended beyond its expiry on December 6, 2007, and that there was no wrongful termination or breach.

Despite these findings, the court noted that the tribunal inexplicably awarded Kanti ₹75 lakh as compensation.

The court observed: “Having arrived at such a finding, it is inexplicable that the Learned Arbitral Tribunal would think it fit to pick a number of Rs.75 lakhs virtually out the hat, to award it to Kanti as compensation for harbouring hope from the alleged silence in reaction to Kanti's emails. If the Learned Arbitral Tribunal was of the view that one party communicating to the other would constitute a contract with the other party remaining silent, the Learned Arbitral Tribunal ought to have found that the contract indeed stood renewed as canvassed on behalf of Kanti.”

Describing the award of compensation as one that “shocks the conscience of the Court,” the court emphasised that no such payment could be ordered if the agreement itself had not been extended.

“If there had been no firm agreed consent to extend the Agreement beyond December 6, 2007, it would naturally follow that there could have been no other compensation even contemplated or, much less, inference of any implied commitment or implied hope,” the court said.

The dispute arose from a 2004 contract under which Kanti manufactured and packaged Jumpin beverages for Hersheys (then part of Godrej Industries). The three-year agreement required Hersheys to purchase a minimum of 12 lakh litres annually under a “take or pay” clause. When renewal talks failed in 2007, Hersheys informed Kanti that the contract would not be extended due to uncompetitive pricing.

Kanti later sought arbitration, alleging that the contract had been extended by conduct, that Hersheys had wrongfully terminated it, and that it had misappropriated Kanti's PET hot-filling technology. The arbitral tribunal rejected all these claims on the merits but still directed Hersheys to pay Rs 75 lakh for the “inconvenience” caused to Kanti, citing Hersheys' silence during renewal discussions as creating an “implied hope.”

The court found this reasoning untenable, observing that there was no evidence or material to show how the tribunal arrived at the Rs 75 lakh figure. It further held that the payment direction was “out of sync with the rest of the Impugned Award” and therefore severable.

Jumpin was recently acquired by Rasna as part of its entry into the ready to drink market.

Case Title: Hersheys India Pvt Ltd v Kanti Beverages Pvt. Ltd.

Case Number: ARBITRATION PETITION NO. 1608 OF 2014

For Petitioner: Advocate Sarosh Bharucha, along with advocates Khushi Dhanesha, Laleh Pandole, instructed by Vashi & Vashi for the Petitioner.

For Respondent: Advocate Vishal Kanade

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