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Amazon-Future Dispute: Supreme Court Sets Aside Delhi High Court's Direction For Coercive Steps Against Future Group [Updated With Judgment]

Srishti Ojha
1 Feb 2022 5:27 AM GMT
Amazon-Future Dispute: Supreme Court Sets Aside Delhi High Courts Direction For Coercive Steps Against Future Group [Updated With Judgment]
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In a major relief to Future group companies, the Supreme Court on Monday set aside the orders of the Delhi High Court which initiated coercive steps against the companies and its promoters Biyanis for alleged violation of the Emergency Award passed by the Singapore Tribunal on the application filed by e-commerce giant Amazon.The Supreme Court has set aside the orders dated 02.02.2021...

In a major relief to Future group companies, the Supreme Court on Monday set aside the orders of the Delhi High Court which initiated coercive steps against the companies and its promoters Biyanis for alleged violation of the Emergency Award passed by the Singapore Tribunal on the application filed by e-commerce giant Amazon.

The Supreme Court has set aside the orders dated 02.02.2021 and 18.03.2021 passed by a single judge of the Delhi High Court ordering coercive steps against Future group and the order dated 29.10.2021 which refused to stay the Singapore Arbitration Tribunal's refusal to vacate the Emergency Award which restrained Future's deal with Reliance.

The Supreme Court has remanded the matters to the Delhi High Court.

"We set aside impugned orders dated 2/2/2021 & 18/3/2021 and other impugned order dated 29th Oct. We Direct the Ld judge to consider issue and pass an order on its own merits uninfluenced by observations", the Chief Justice of India pronounced the operative portion of the order. Detaield copy of the judgment is awaited.

"...so far as the interim relief is concerned we said that after the order is reserved, another writ petition filed. We perused the content and some issued interlinked with interlocutory order we'll hear with a writ petition", the CJI said. The bench is considering another writ petiton filed by Future Group against the recovery actions initiated by banks.

A Bench comprising Chief Justice of India NV Ramana, Justice AS Bopanna and Justice Hima Kohli delivered its judgement in the following two pleas:

  • Special Leave Petitions of Future Coupons Private Ltd and Future Retail Ltd against Delhi High Court's Single Bench March 2021 order directing attachment of assets of Future group companies and its promoters for breach of Emergency Award (order passed by a single bench of Justice Midha). In the order dated 18.03.2021, Justice Midha confirmed the earlier order dated 02.02.2021 which directed status quo on FRL-Reliance deal.
  • Special Leave Petitions of both FRL and FCPL challenging Delhi HC's 29th Oct order which refused to stay the Singapore Arbitration Tribunal's refusal to vacate the Emergency Award restraining it to continue with Reliance deal.

The Supreme Court had reserved orders after hearing Senior Advocates Harish Salve(for Future Coupons), Mukul Rohatgi (for Future Retail), Gopal Subramaniam and Aspi Chinoy for Amazon.

Procedural irregularities by single bench; No opportunity of hearing given to Future

The Supreme Court observed that opportunity provided to the Future Group before the Single Judge was insufficient, and cannot be upheld in the eyes of law.

Future Retail (FRL) and Future Coupons (FCPL) were not provided sufficient time or opportunity to file their counter or raise their defence and were allowed to file a brief note of submission within twenty¬ four hours, before orders were passed.

According to the Top Court, serious procedural errors were committed by the Single Judge of the Delhi High Court.

It further observed that Natural justice is an important facet of a judicial review and providing effective natural justice to affected parties, before a decision is taken, is necessary to maintain the Rule of law.

Civil Contempt Can Be Made Out Only When There's Been Wilful Disobedience:
The Bench observed that contempt of a civil nature can be made out under Order XXXIX Rule 2A CPC not when there has been mere "disobedience", but only when there has been "wilful disobedience".
According to the Court, the allegation of wilful disobedience being in the nature of criminal liability, the same has to be proved to the satisfaction of the court that the disobedience was not mere "disobedience" but "wilful" and "conscious".

The Bench therefore set aside the punitive directions issued by the Single Judge against the Future Group companies and its promoters saying that the pre-condition of 'sufficient mental element for wilful disobedience' is not satisfied.

The Bench also noted that Senior Advocate Gopal Subramanium appearing for Amazon fairly stated that Amazon is not interested in proceeding with the punitive directions.

Courts Expected To Be Cautious While Making Observations On Merits Of Case:

With regards to the merits of the case, the Court observed that the interim order enforcing the Emergency Award has adopted a standard beyond 'prima facie view', as required under law.

"It is expected of Courts to be cautious while making observations on the merits of the case, which would inevitably influence the Arbitral Tribunals hearing the matters on merit." the Bench said

Matter Needs To Be Remitted Back To Decide Important Questions of Law:

With regard to the Delhi High Court's order dated 29.10.2021 which refused to stay the Singapore Arbitration Tribunal's refusal to vacate the Emergency Award which restrained Future's deal with Reliance, the Bench has observed that certain important questions of law concerning the effect of the award of an Emergency Arbitrator and the jurisdiction of an Arbitral Tribunal qua such awards arise in the present matter. Therefore, these matters need to be remitted back for adjudication on its own merits.

The Bench also clarified that the Supreme Court's order dated 09.09.2021, imposed no bar on the High Court to adjudicate the issue concerning legality of the vacate application order by the Arbitral Tribunal. The Bench has opined that adjudication of the applications under Section 37(2), Arbitration Act filed by the appellants before the Delhi High Court are distinct from the earlier appeals filed before this Court.

 

'Future Retail Will Sink With 30,000 Employees If Reliance Deal Doesn't Get Through' : Future Group Lawyers To Supreme Court In Case Against Amazon

Amazon Ready To Help Future Retail In Financial Problems : Gopal Subramanium Tells Supreme Court

Background

The Emergency arbitrator through its order dated 25th October 2020 has restrained FRL from going forward with its deal with Reliance and injuncted FRL from taking steps in furtherance of the Scheme (Scheme of Arrangement with Reliance). The Arbitral Tribunal constituted to hear Future-Amazon dispute reinforced the Emergency Arbitrator's order on October 21, 2021, and dismissed FRL's plea to vacate the order of the Emergency Arbitrator.

FRL sought that the punitive directions issued by the Single Judge be set aside since its actions in obtaining the approvals of CCI and SEBI were in terms of the directions issued in the judgment in an earlier suit against Amazon. Also, the Supreme Court had on February 22, 2021, passed an interim order permitting proceedings before the NCLT to proceed without attaining culmination.

FRL had submitted that any enforcement of the order of the Emergency Arbitrator must now come to an end, as it is the order of the arbitral tribunal that has to be enforced, and it must, of necessity, be subject to any orders that may be made in the Appeal under Section 37 and/or any orders that may be passed by Supreme Court.

According to FRL, the position taken by Amazon that the Emergency Arbitrator's order can still be enforced leads to an absurd situation in that even if the order of the arbitral tribunal declining to reconsider and vacate the order of the emergency arbitrator, is stayed or set aside in the Appeal under Section 37, the enforcement of the Emergency Arbitrator's order could still continue.

On the other hand, the lawyers of the American e-commerce giant argued before the Supreme Court that Future Retail Ltd (FRL) and Future Coupons Private Ltd (FCPL) have repeatedly violated the injunction orders passed by the Emergency Arbitrator and hence, they cannot seek reliefs from the Court.

Amazon, therefore, urged the Court to consider imposing a condition on the Future Group to obey the Tribunal's order.

Responding to Future Group's submissions that Future Retail will sink with 30000 employees losing their jobs if FRL's deal with Reliance doesn't go through, Mr Subramanium submitted that Amazon has been willing to assist them with the financial problem

It was argued on behalf of Amazon that the Arbitral Tribunal pronounced its order on Oct 21, 2021, rejecting FRL's application for vacation of EA's order. The net effect, therefore, is that until the order of Arbitral Tribunal is suspended in proper appeal under Section 37 of the Arbitration and Conciliation Act that order must be complied with. He added that the only reason the petitioners wanted Justice Midha's order to be vacated was because it said that EA's order is a valid order and has to be complied with. Amazon also pointed out that the Supreme Court has held that Emergency Award is enforceable under the Arbitration Act.

In response to the Court's suggestion that FRL's appeal against order of the Tribunal may be heard by the High Court, Senior Advocate Gopal Subramanium had submitted that FRL certainly is entitled to an appeal under Sec 37 of the Arbitration Act and Amazon has absolutely no difficulty in the matter but being dealt with. He had added that till the Single Judge decides the matter it is essential that FRL must abide by the Tribunal's order.

What was the Delhi High Court single bench March 2021 order?

A single-judge bench of Justice JR Midha on March 18, 2021 had directed for attachment of property of Future group companies and their promoters including Kishore Biyani and had also directed them to file additional affidavits indicating the details of their assets and property for violation of the emergency award. Also, the Single Bench had imposed a cost of Rs. 20 lakhs on FRL and its promoters for raising an untenable plea of nullity against the award and the cost was directed to be deposited in PM fund of Covid 19 to be used in vaccination of senior citizens belonging to the below poverty line group. The Court ordered the same to be deposited within 2 weeks and the same shall be put on record within 1 week thereafter.

The Court had held that the Emergency Arbitrator had rightly invoked the 'Group of Company' doctrine in relation to the Future Group companies and in view of this, the Court had also issued show-cause notice to as to why they shouldn't be detained in civil prison for violation of the order dated 25th October 2020.

 Case Titles: Future Retail Ltd v Amazon.com Investment Holdings & Ors, Future Coupons Pvt Ltd & Ors vs Amazon.com Investment Holdings & Ors

Click Here To Read/Download Judgment


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