Future Group Agreed To Emergency Arbitration, Amazon Argues; Supreme Court Reserves Judgment

Amazon on Thursday told the Supreme Court that the Division Bench of the Delhi High Court erred in staying the order of the Single Judge for enforcement of the Emergency Arbitrator's interim injunction against the transaction relating to the transfer of Future Retail's retails assets to Mukesh Dhirubhai Ambani Group.The bench of Justices Rohinton Nariman and B. R. Gavai was hearing Amazon's challenge to an order dated March 22 passed by a Division Bench of the Delhi High Court staying a Single-Judge order which had upheld the Emergency Award passed by a Singapore Tribunal halting the Reliance-Future deal worth Rs. 24,713 crores. On July 21, Amazon had raised the issue of the maintainability of the appeal filed by FRL before the Division Bench of the High Court. Senior Advocate Gopal Subramaniam had stated, "Section 37 provides for an appeal against an Order under Section 17(2) of the 1996 Act. This is an incompetent appeal". It was FRL's response that once the arbitral proceedings come to an end and an arbitral award is passed, there is no going back to the Arbitration Act and the parties come under the CPC; that once you cross into the realm of enforcement and go into section 17(2) (any interim order issued by the arbitral tribunal under section 17(1) shall be deemed to be an order of the Court for all purposes and shall be enforceable under the CPC, in the same manner as if it were an order of the Court), the proceedings are then governed by the CPC. It was submitted that enforcement is a power under CPC Order 21, that section 37 of the 1996 Arbitration Act has no role to play, and that FRL's appeal before the division bench is to be maintainable under Order 43 of the CPC.Making his rejoinder, Mr. Subramaniam on Thursday told the bench, "Without filing an appeal under 37, an execution order is vacated? It is like vacating an order under 17(1) and 17(2). How does the division bench do it? The appeals are incompetent! And what is the consequence? It is an attempt to achieve collateral what was not attempted to be done directly by filing a proper appeal!"He relied on case-laws to submit that execution proceedings and proceedings akin thereto cannot give rise to corresponding rights, vested and substantive rights, in favour of the party who wants to resist an order or award to add an additional inventive clog, which, he said, is the endeavour of the respondents in the instant case. "If it was true that these execution orders are orders passed under the CPC, then look at the consequence- then appeals would lie not only under 17 but even under section 36 (which provides for enforcement of awards in accordance with the provisions of the CPC, in the same manner as if it were a decree of the court, unless the operation of the award is stayed on an application under section 34 for setting aside the award). That was not the intention of the legislature. The short question is, do the courts, as defined under the Arbitration Act, make a handover to the CPC? No, they don't. They only employ what is available under the CPC to discharge the functions under the Arbitration Act", continued Mr. Subramaniam.He cited authorities to submit that the Arbitration Act requiring an award to be enforced in accordance with the provisions of the CPC in the same manner as if it were a decree of the Court does not imply that the award is a decree of a particular court and it is only a limited fiction for the purpose of enforcement. It is, thus, the enforcement mechanism, which is akin to the enforcement of a decree but the award itself is not a decree of the civil court as no decree whatsoever is passed by the civil court. It is the arbitral tribunal, which renders an award and the tribunal does not have the power of execution of a decree. For the purposes of execution of a decree the award is to be enforced in the same manner as if it was a decree under the CPC. "The award itself is not a decree or order of the court, but only to be enforced as such as the tribunal cannot enforce it", he submitted.He advanced that section 36 is in the spirit of Article 36 of the UNCITRAL, on Grounds for refusing recognition or enforcement, which has been enacted to avoid multiple bites in the cherry by a party- "The purpose of the 1996 statute is to give finality to the process, to make it linear. The argument of the other side will make it cylindrical or circular"He said section 18 of Act is also relevant as the arbitrator is imbued with the duty to accord fair treatment to both parties, as in the case of courts.Mr. Subramaniam submitted that one more indication that the proceedings under the 1996 Act, even for implementation of the award, cannot be considered to be proceedings under the CPC is the absence in it of a provision akin to section 41 of the 1940 Arbitration Act, which provided that the provisions of CPC shall apply to all proceedings before the Court, and to all appeals, under the 1940 Act, and the Court shall have, for the purpose of...

Future Group Agreed To Emergency Arbitration, Amazon Argues; Supreme Court Reserves Judgment

Mehal Jain

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