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Amazon- Future Dispute : Supreme Court Stays Enforcement Proceedings In Delhi High Court

LIVELAW NEWS NETWORK
9 Sep 2021 7:42 AM GMT
Amazon- Future Dispute : Supreme Court Stays Enforcement Proceedings In Delhi High Court
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The Supreme Court on Thursday stayed the proceedings instituted by global e-commerce giant Amazon for the enforcement of the Emergency Award passed in its favour by a Singapore-based arbitrator which halted the merger deal between Future Retail Limited and Reliance group.The Court also asked all authorities including the NCLAT, CCI and the SEBI to not pass final orders for four weeks in...

The Supreme Court on Thursday stayed the proceedings instituted by global e-commerce giant Amazon for the enforcement of the Emergency Award passed in its favour by a Singapore-based arbitrator which halted the merger deal between Future Retail Limited and Reliance group.

The Court also asked all authorities including the NCLAT, CCI and the SEBI to not pass final orders for four weeks in relation to the Future-Reliance deal.

A bench comprising the Chief Justice of India NV Ramana, Justice Surya Kant and Justice AS Bopanna passed the above order in the special leave petitions filed by Future Coupons Private Ltd and Future Retail Ltd against the against the order passed by the single bench of the Delhi High Court that directed the attachment of assets of Future group companies and its promoters Kishore Biyani and others for breach of the Emergency Award. The single bench had also issued a show-cause notice for civil arrest of Biyani and other directors of Future Group

The Supreme Court passed the order after hearing elaborate arguments by Senior Advocates Harish Salve and Mukul Rohatgi for Future group and Senior Advocate Gopal Subramanium for Amazon. Both the sides expressed their consent to the order passed by the Court.  The bench clarified that it was a consent order.

Order passed to balance the interests of both parties : SC

The bench stated that it was passing the order taking into consideration the fact that the Future group has approached the Singapore International Arbitration Centre to vacate the interim order passed by the Emergency Arbitrator and arguments have been concluded in that.

"...to balance interest of parties we stay all further proceedings before Delhi HC for time being  and direct all authorities, including the NCLAT, CCI and SEBI not to pass any final orders for period of 4 weeks. List after 4 weeks", the bench stated in its order.

During the hearing, the CJI orally remarked :

"The issue is, we must be fair. In a matter of this magnitude, if hearing takes place without giving opportunity to parties, how can one pass orders attaching property, pay cost, etc. What is this!"

Subramanium submitted that Amazon has no interest in taking punitive action against Future group or in sending its promoters to jail but wanted compliance of the award.

"Do I have any joy in asking people to go to prison? But shouldn't order of an arbitrator be obeyed? Can they declare the order to be nullity only because it is adverse to them?I'm not interested in punitive action but certainly it can't be argued after SC's judgement in August, there is no appeal against EA's order. Can anyone say I will continue to be in breach?", Subramanium submitted.

Harish Salve argued that the single judge's order went beyond the scope of Emergency Award and had the effect of prejudging the issues which are pending final adjudication before the Tribunal.

"I have an arbitration pending, I've taken a defence that I've not breached agreement. The single judge says admittedly the Respondents have breached the agreement!", Salve said.

Mukul Rohatgi argued that the single judge's order is "procedurally flawed" as the attachment order was passed without affording any opportunity of hearing to the parties.

"The judge is talking about merits which he isn't supposed to decide, the merit is before the arbitrator", Rohatgi argued.

Emergency Award upheld by Supreme Court last month

Notably, a bench headed by Justice RF Nariman(since retired) of the Supreme Court had last month held that Emergency Award passed by Singapore arbitrator stalling FRL-Reliance deal was enforceable in Indian law and had also held that single judge's order was not appealable to the division bench of the High Court under Section 37(2) of the Arbitration Act.

This had resulted in reinstating the order of the single bench of the Delhi High Court which had ruled in favour of the enforcement of the Emergency Award and had ordered the attachment of Future Coupons, Future Retail and Future group CEO Kishore Biyan's assets.

What was the Delhi High Court single bench 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 rimposed 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.

​​"In exercise of power under Order XXXIX Rule 2A(1) of the Code of Civil Procedure, the assets of respondents No.1 to 13 are hereby attached. Respondents No.1 to 13 are directed to file an affidavit of their assets as on today in Form 16A, Appendix E under Order XXI Rule 41(2) of the Code of Civil Procedure within 30 days. Respondent No.1, 2, 12 and 13 are directed to file an additional affidavit in the format of Annexure B-1 and respondents No.3 to 11 are directed to file an additional affidavit in the format of Annexure A-1 to the judgment of M/s Bhandari Engineers & Builders Pvt. Ltd. v. M/s Maharia Raj Joint Venture along with the documents mentioned therein within 30 days," the High Court single bench had held.

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.

"The respondents are directed not to take any further action in violation of the interim order dated 25th October, 2020. The respondents are further directed to approach all the competent authorities for recall of the orders passed on their applications in violation of the interim order dated 25th October, 2020 within two weeks. The respondents are directed to file an affidavit to place on record the actions taken by them after 25th October, 2020 and the present status of all those actions at least three days before the next date of hearing. Respondents No.3 to 11 shall remain present before this Court on the next date of hearing," the Court had directed Future Group Companies and its Promoters.

After the retirement of Justice JR Midha in June this year, the matter was assigned to a bench of Justice Suresh Kumar Kait. On August 19, Justice Kait had adjourned the proceedings for compliance to September 16, observing that he will proceed with the matter if no stay is granted by the Supreme Court in the meanwhile.

Case Title: Future Coupons Private Limited Vs. Amazon.Com Nv Investment Holdings LLC| Diary Number 18739| 2021

Click here to read/download the order

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