Supreme Court of India
FUTURE COUPONS PRIVATE LIMITED & ORS.versusAMAZON.COM NV INVESTMENT HOLDINGS LLC & ORS.
- Citation
- 2022 INSC 129
- Decided
- 1 February 2022
- Bench
- N V RAMANA
Holding
The Supreme Court set aside the impugned orders, holding that they were violative of natural justice and that wilful disobedience was not proved, rendering the contempt and punitive directions void.
Summary
Future Coupons Private Ltd (FCPL) and Future Retail Ltd (FRL) challenged orders of the Delhi High Court Single Judge that enforced an emergency arbitrator’s interim award in a dispute over FRL’s sale of retail assets to Reliance. The appellants alleged that the judge denied them a fair opportunity to present their defence, violating the principles of natural justice, and that the contempt orders were based on mere, not wilful, disobedience. The Supreme Court examined whether the procedural orders of 02‑02‑2021, 18‑03‑2021 and 29‑10‑2021 were legally valid, and considered the standards for contempt under Order XXXIX Rule 2‑A CPC. It held that the judge had not provided sufficient time for submissions, that wilful disobedience was not established, and that the punitive directions were therefore ultra vires. Consequently, the Court set aside all three impugned orders and remitted the matters to the High Court for fresh consideration on their merits.
Issues considered
- Whether the orders dated 02‑02‑2021 and 18‑03‑2021 passed by the Single Judge are valid in law.
- Whether the order dated 29‑10‑2021 passed by the Single Judge is valid in law.
- Whether the principles of natural justice were violated in the enforcement proceedings.
- Whether contempt of civil court can be established on the basis of mere disobedience or requires wilful disobedience.
- Whether an emergency arbitrator’s award is enforceable under Sections 17(1) and 17(2) of the Arbitration and Conciliation Act, 1996.
Legislation cited
- Arbitration and Conciliation Act, 1996s. Section 17(1), s. Section 17(2), s. Section 37
- Code of Civil Procedure, 1908s. Order XXI Rule 41(2), s. Order XXXIX Rule 2-A
- Companies Act, 2013s. Section 230, s. Section 231, s. Section 232
Subjects
Natural justiceProcedural fairnessContempt of courtWilful disobedienceEmergency arbitratorArbitration award enforcementSection 17 Arbitration ActOrder XXXIX Rule 2-A CPCCommercial disputeShare purchase agreementSIAC arbitration
Judgment
[2022] 12 S.C.R. 299 299
FUTURE COUPONS PRIVATE LIMITED & ORS. A
v.
AMAZON.COM NV INVESTMENT HOLDINGS LLC & ORS.
(Civil Appeal Nos. 859-860 of 2022)
FEBRUARY 01, 2022 B
[N. V. RAMANA, CJI, A. S. BOPANNA AND
HIMA KOHLI, JJ.]
Doctrines/Principles – Principle of Natural Justice – Judicial
Interference – Scope and Ambit – Natural Justice is an important
C
facet of a Judicial Review and providing effective natural justice to
the affected parties, before a decision is taken, is necessary to
maintain Rule of law – Courts are expected to follow the principles
of natural justice meticulously to ensure that the highest standard
of fairness are afforded to the parties – Natural Justice and
unfairness are sworn enemies – Therefore, the court are required to D
stick to such principles and particularly in matters of commercial
nature which could have serious impact on the economy and
employment of thousands of people – Whenever an order is struck
down as invalid being in violation of the principles of natural justice,
there is no final decision of the case and fresh proceedings are left
E
open.
Code of Civil Procedure, 1908 – Or. XXXIX r. 2-A – A civil
contempt can be made out u/Or.XXXIX r. 2-A not when there has
been mere ‘disobedience’, but only when there has been ‘wilful
disobedience’ – Since the allegation of wilful disobedience is
F
criminal in nature, the same has to be proved to the satisfaction of
the court – The power, while exercising contempt jurisdiction, must
be exercised with caution rather than on mere probabilities.
Remitting back the matters, the Court
HELD: 1. Attention has been drawn to a catena of procedural G
orders passed by the High Court in OMP (ENF) (COMM) No.17
of 2021. From the record, it can be observed that FRL and FCPL
were not provided sufficient time or opportunity to file their
counter or raise their defense. On 29.01.2021, they were allowed
to file a brief note of submission within twenty- four hours, before
H
299
300 SUPREME COURT REPORTS [2022] 12 S.C.R.
A orders were passed on 02.02.2021. On a perusal of the orders, it
is found that serious procedural errors were committed by the
Single Judge. Natural justice is an important facet of a judicial
review. Providing effective natural justice to affected parties,
before a decision is taken, is necessary to maintain the Rule of
law. Natural justice is usually discussed in the context of
B
administrative actions, wherein procedural requirement of a fair
hearing is read in to ensure that no injustice is caused. When it
comes to judicial review, the natural justice principle is built into
the rules and procedures of the Court, which are expected to be
followed meticulously to ensure that highest standards of fairness
C are afforded to the parties. It is well known that natural justice is
the sworn enemy of unfairness. It is expected of the Courts to be
cautious and afford a reasonable opportunity to parties, especially
in commercial matters having a serious impact on the economy
and employment of thousands of people. Coming to the facts
herein, the opportunity provided to the appellants herein was
D
insufficient, and cannot be upheld in the eyes of law. Whenever
an order is struck down as invalid being in violation of the
principles of natural justice, there is no final decision of the case
and fresh proceedings are left open. All that is done is to vacate
the order assailed by virtue of its inherent defect. Such
E proceedings are not terminated and are usually remitted back.
[Paras 35, 36, 37 and 38][315-E-H; 316-A-C]
2. Contempt of a civil nature can be made out under Order
XXXIX Rule 2-A CPC not when there has been mere
“disobedience”, but only w hen there has been “wilful
F disobedience”. 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”. Considering the
fact that in the suit instituted by FRL, the Single Judge had earlier
allowed FRL and respondent ‘A’ to continue their pursuit before
G various regulatory authorities, and in view of the interim orders
of this Court dated 22.02.2021 and 09.09.2021, and the Courts
below, the Court is inclined to set-aside aforesaid directions as
the pre-condition of ‘sufficient mental element for wilful
disobedience’ is not satisfied. The punitive directions issued in
H
FUTURE COUPONS PRIVATE LIMITED v. AMAZON.COM NV 301
INVESTMENT HOLDINGS LLC
the impugned orders of the Single Judge dated 02.02.2021 and A
18.03.2021 passed in OMP(ENF)(COMM) No. 17 of 2021 are
set aside. Also, impugned order dated 29.10.2021 in Arb. A.
(Comm.) No. 64 and 63 of 2021 is set aside. [Paras 41, 42 and
44][317-F-G; 318-E-G; 319-A]
Canara Bank v. Debasis Das (2003) 4 SCC 557 : [2003] B
2 SCR 968 – relied on.
Delhi Chemical and Pharmaceutical Works Pvt. Ltd. &
Anr. v. Himgiri Realtors Pvt. Ltd. & Anr., EFA (OS)
(Comm.) No. 4 of 2021; Ram Kishan v. Tarun Bajaj,
(2014) 16 SCC 204 : [2014] 1 SCR 538 – referred to. C
M/s. Bhandari Engineers & Builders Pvt. Ltd. v. M/s.
Maharia Raj Joint Venture, 2019 SCC Online Del.
11879 – referred to.
Case Law Reference
D
[2003] 2 SCR 968 relied on Para 38
[2014] 1 SCR 538 referred to Para 41
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 859-
860 of 2022.
From the Judgment and Order dated 02.02.2021 and 18.03.2021 E
of the High Court of Delhi at New Delhi in OMP (ENF.) (COMM)
No.17 of 2021.
With
Civil Appeal Nos. 861-862, 864 and 863 of 2022. F
Harish Salve, K.V. Viswanathan, Darius Khambhata, Ritin Rai,
Mukul Rohatgi, Sr. Advs., Raghav Shankar, Aditya Mehta, Tushar
Hathiramani, Ms. Madhu Gadodia, Harshvardhan Jha, Deepak
Deshmukh, Ms. Arshiya Sharda, Ms. Ritika Sinha, Pankaj Patel, Mrs.
Yugandhara Pawar Jha, Mahesh Agarwal, Rishi Agrawala, Karan Luthra, G
Pranjit Bhattacharya, Rishabh Parikh, E. C. Agrawala, Advs. for the
Appellants.
Gopal Subramanium, Ranjit Kumar, Aspi Chinoy, Gourab Banerji,
Amit Sibal, Guru Krishna Kumar, Sr. Advs., Nakul Dewan, Abhijeet
Sinha, Anand S. Pathak, Amit K. Mishra, Shashank Gautam, Ms.
H
302 SUPREME COURT REPORTS [2022] 12 S.C.R.
A Sreemoyee Deb, Vijay Purohit, Mohit Singh, Promit Chatterjee, Ms.
Anubhuti Mishra, Shivam Pandey, Ms. Samridhi Hota, Pratik Jhaveri,
Ms. Nikita Bangera, Chetan Chawla, Faizan Mithaiwala, Ms. Didon
Misri, Vijayendra Pratap Singh, Rachit Bahl, Ms. Roopali Singh, Abhijnan
Jha, Priyank Ladoia, Tanmay Sharma, Ms. Vanya Chhabra, Arnab Ray,
Vedant Kapur, Shaurya Mittal, Abhisar Vidyarthi, Pawan Bhushan, Ms.
B
Hima Lawrence, Ms. Ujwala Uppaluri, S. P. Mukherjee, T. S. Sundaram,
Vinay Tripathi, Aishvary Vikram, Kaustubh Prakash, Ms. Anushka Shah,
Ms. Neelu Mohan, Ms. Smriti Kalra, Nagarkatti Kartik Uday, Ashok
Panigrahi, Ms. Geetanjali, Nabab Singh, Advs. for the Respondents.
C The Judgment of the Court was delivered by
N. V. RAMANA, CJI
1. Leave granted in all matters.
2. These appeals are against various orders of Delhi High Court
D connected to the Amazon-Future dispute. Civil Appeals arising out of
SLP (C) No. 13547-48 of 2021 and SLP (C) No. 13556-57 of 2021,
impugns order dated 02.02.2021 and 18.03.2021 passed in OMP (ENF)
(Comm) 17 of 2021 and Civil Appeals arising out of SLP (C) Nos. 18089
and 18080 of 2021, are against impugned orders dated 29.10.2021 passed
E in Arb. A (Comm.) No. 63 of 2021 and I.A. No. 14285 of 2021 in Arb. A
(Comm.) No. 64 of 2021 respectively.
3. At the outset, it is necessary for this Court to have a brief
background before indulging in analyzing the issue at hand. On
22.08.2019, Amazon entered into Shareholder and Share-Subscription
F Agreements with Future Coupon Private Limited (FCPL). Through
these instruments, Amazon intended to acquire 49% stake in FCPL.
The aforesaid agreements contained an arbitration agreement, wherein
parties resolved to settle their disputes in accordance with the
Arbitration Rules of the Singapore International Arbitration Center
(SIAC). The parties had further resolved to have the seats at New
G Delhi.
4. On 12.08.2019, FCPL and its promoters entered into a
Shareholder Agreement with Future Retail Limited (FRL). Through this
Agreement, FCPL was granted certain protective rights. One such right
is produced as under:
H
FUTURE COUPONS PRIVATE LIMITED v. AMAZON.COM NV 303
INVESTMENT HOLDINGS LLC [N. V. RAMANA, CJI]
Clause 10 of SHA: A
10. TRANSFER OF RETAIL ASSETS
10.1 As of the Execution Date, the Company has set up an
aggregate of at least 1,534 (one thousand five hundred and
thirty four) retail outlets/formats including without limitation
the Small Store formats across India and such retail outlets/ B
stores are an integral part of the business conducted by the
Company representing a significant and substantial part of
the business conducted by the Company. The Existing
Shareholders and the Company further agree, covenant and
undertake to FCL that the Company shall be the sole vehicle C
for the conduct of such current business comprising of a
widespread network of the retail outlets/formats including
without limitation the Small Store formats that the Company
has established and is operating across India and
consequently such business shall continue to be an integral
part of the Company’s business. D
10.2 Accordingly, any sale, divestment, transfer, disposal, etc.,
of such retail outlets/ formats including without limitation
the Small Store Formats shall be in accordance with this
Agreement, and the company and the Existing shareholders
covenant and undertake that during the subsistence of this E
Agreement, the company shall not transfer, or dispose off
the Retail Assets except as otherwise mutually agreed
between the Company, the Existing Shareholders and FCL
in writing.
10.3 Notwithstanding anything contained herein, the Company F
and the Existing Shareholders agree that the Retail Assets
shall not be transferred, Encumbered divested, or disposed
of, directly or indirectly, in favour of a Restricted Person.
There is no dispute that one of the restricted persons included the
Reliance Group. G
5. As in March 2020, FRL submitted that there was business
downturn due to Covid-19 lockdowns as there were restrictions on retail
sale through brick-and-mortar shops. In light of the same, the Board of
FRL decided to sell, retail businesses and assets to Reliance, for a
consideration in excess of Rs. 25,000 crores. Further, it is contended by H
304 SUPREME COURT REPORTS [2022] 12 S.C.R.
A FRL that there were outstanding loans of about Rs.20,000 crores with a
serious and tangible risk of becoming insolvent. It is submitted that it
was in this context that the subsequent transaction was entered into to
alleviate its financial position and protect employment of around 25,000
employees of the Future Group.
B 6. Aggrieved by the aforesaid sale transaction, Amazon initiated
arbitration proceedings before the SIAC. Amazon filed an application
for emergency relief with the Registrar of the SIAC Court of Arbitration
seeking interim prohibitory injunction to prevent FRL and FCPL from
taking further steps in the aforesaid transaction with the Reliance Group.
Parallelly, FRL filed a suit before the Delhi High Court registered as
C CS(COMM) No. 493 of 2020, against Amazon for tortious interference
in the Scheme for the sale of assets.
7. On 25.10.2020, the Emergency Arbitrator passed an Interim
Award in favor of Amazon. It may be noticed that the Emergency
Arbitrator and the Single Bench came to diametrically opposite
D conclusions which are juxtaposed herein below:-
E
F
G
H
FUTURE COUPONS PRIVATE LIMITED v. AMAZON.COM NV 305
INVESTMENT HOLDINGS LLC [N. V. RAMANA, CJI]
A
B
C
D
E
F
G
H
306 SUPREME COURT REPORTS [2022] 12 S.C.R.
A the statutory
authorities/Regulators to apply
their mind to the facts and legal
issues therein and come to the
right conclusion. There is yet
another aspect as to why no
B interim injunction can be
granted in the present
application for the reason
both FRL and Amazon have
already made their
representations and counter
representations to the
C statutory
authorities/regulators and
now it is for the Statutory
Authorities/Regulators to take
a decision thereon. Therefore,
this Court finds that no case
D for grant of interim injunction
is made out in favour of the
FRL and against Amazon.
13. Consequently, the
present application is disposed
of, declining the grant of interim
injunction as prayed for by
E FRL, however, the Statutory
Authorities/Regulators are
directed to take the decision on
the applications/objections in
accordance with law.
F 8. In the meanwhile, CCI and SEBI approved the composite
Scheme proposed by FRL-Reliance. Thereafter, FRL filed for sanction
of the composite Scheme of arrangement under the provisions of Sections
230 to 232 of the Companies Act, 2013 before National Company Law
Tribunal (NCLT).
G 9. Amazon filed a Petition for enforcement of the Emergency
Arbitrator Award, under Section 17(2) of the Arbitration and Conciliation
Act, 1996, before the Delhi High Court on 25.01.2021 and the same was
heard for the first time on 28.01.2021. As the appellants herein challenge
the impugned order on the ground of failure to adhere to the principles of
natural justice, it is apt to reproduce certain procedural orders passed by
H
FUTURE COUPONS PRIVATE LIMITED v. AMAZON.COM NV 307
INVESTMENT HOLDINGS LLC [N. V. RAMANA, CJI]
the learned Single Judge, Justice Midha, in OMP (ENF) (COMM) No.17 A
of 2021. On 28.01.2021, the following order was passed:
“1. The hearing has been conducted through video conference.
2. Arguments partly heard.
3. List for continuation of the arguments on 29th January, 2021
at the end of the Board. B
4. The order be uploaded on the website of this Court
forthwith.”
On 29.01.2021, the following order was passed:
“1. The hearing has been conducted through video conference.
C
2. Issue notice. Learned counsels for respondents accept
notice.
3. Further arguments heard from 02:45 PM to 04:30 PM.
4. List for continuation of the arguments on 01st February,
2021. D
5. Both the parties have submitted brief note of submissions.
6. Learned senior counsel for the respondent No.2 submits
that he shall file additional note of submissions on the factual
aspect by tomorrow afternoon with advance copy to the
counsel for the petitioner by tomorrow evening. Respondent E
No.2 shall also respond to the brief note of submissions of
the petitioner relating to the facts.
7. The order be uploaded on the website of this Court
forthwith.”
On 01.02.2021, the following order was passed: F
“1. Respondent No.2 has filed additional submissions to which
the petitioner has filed the response.
2. Learned senior counsels for the respondents have concluded
the oral arguments.
3. List for rejoinder submissions of the petitioner on 02nd G
February, 2021.
4. It is clarified that no further written submissions shall be
filed by any of the parties.”
10. On 02.02.2021, the first substantive order [1st impugned
Order] was passed in the following manner: H
308 SUPREME COURT REPORTS [2022] 12 S.C.R.
A “8. This Court is of the prima facie view that the Emergency
Arbitrator is an Arbitrator; the Emergency Arbitrator has rightly
proceeded against the respondent No.2; the order dated 25th
October, 2020 is not a nullity; the order dated 25th October, 2020
is an order under Section 17(1) of the Arbitration and Conciliation
Act. This Court is of the view that the order dated 25th October,
B
2020 is appealable under Section 37 of the Arbitration and
Conciliation Act. This Court is of the clear view that the order
dated 25th October, 2020 is enforceable as an order of this Court
under Section 17(2) of the Arbitration and Conciliation Act. The
detailed reasons shall be given in the reserved order.
C 9. This Court is satisfied that immediate orders are necessary to
protect the rights of the petitioner till the pronouncement of the
reserved order. In that view of the matter, the respondents are
directed to maintain status quo as on today at 04.50 P.M. till the
pronouncement of the reserved order. The respondents are
D 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, within 10 days. All the concerned authorities are directed
to maintain status quo with respect to all matters in violation of
the order dated 25th October, 2020 and shall file the status report
with respect to the present status within 10 days of the receipt of
E this order. The other prayers of the petitioner shall be considered
in the reserved order.
10. Copy of this order be given dasti under signatures of the Court
Master to counsels for the parties. Copy of this order be also
given dasti under signatures of the Court Master to Mr. Kirtiman
F Singh, learned Central Government Standing Counsel who shall
send the same to all the concerned authorities dealing with the
actions initiated by the respondents in violation of the order dated
25th October, 2020. The petitioner shall send the list of all the
authorities to Mr. Kirtiman Singh, learned Central Government
Standing Counsel within three days.”
G
11. Aggrieved by the stay order granted by the learned Single
Judge, while reserving the matter, FRL filed an intra-court appeal before
the Division Bench in FAO OS (Comm.) No. 21 of 2021. The Division
Bench vide Order dated 08.02.2021, passed the following order:
“12. It is made clear that the observations made in this order are
H only a prima facie view for the purpose of grant of interim relief
FUTURE COUPONS PRIVATE LIMITED v. AMAZON.COM NV 309
INVESTMENT HOLDINGS LLC [N. V. RAMANA, CJI]
and shall not come in the way of the learned Single Judge in passing A
the final order in OMP(ENF)(Comm) No.17/2021 and needless
to state that the order shall be passed uninfluenced by any
observations made hereinabove.”
12. Amazon appealed against this Order before the Supreme Court
in SLP (C) No. 2856-57 of 2021. Vide order dated 22.02.2021, this Court B
inter-alia held as under:
“ In the meantime, the NCLT proceedings will be allowed
to go on but will not culminate in any final order of sanction
of scheme.”
(Emphasis supplied) C
13. Again on 18.03.2021, the learned Single Judge in OMP (ENF)
(COMM) No.17 of 2021, passed the 2nd impugned orderwith aforesaid
directions:
“188. The Emergency Arbitrator is an Arbitrator for all intents
and purposes; order of the Emergency Arbitrator is an order under D
Section 17(1) and enforceable as an order of this Court under
Section 17(2) of the Arbitration and Conciliation Act.
…………
190. The respondents have raised a vague plea of Nullity without
substantiating the same. The interim order of the Emergency E
Arbitrator is not a Nullity as alleged by respondent No.2.
191. Combining/treating all the agreements as a single integrated
transaction does not amount to control of the petitioner over FRL
and therefore, the petitioner’s investment does not violate any
law.
F
192. All the objections raised by the respondents are hereby rejected
with cost of Rs.20,00,000/- to be deposited by the respondents
with the Prime Minister Relief Fund for being used for providing
COVID vaccination to the Below Poverty Line (BPL) category
- senior citizens of Delhi. The cost be deposited within a period of
two weeks and the receipt be placed on record within one week G
of the deposit.
193. The respondents have deliberately and wilfully violated the
interim order dated 25th October, 2020 and are liable for the
consequences enumerated in Order XXXIX Rule 2A of the Code
of Civil Procedure. H
310 SUPREME COURT REPORTS [2022] 12 S.C.R.
A 194. 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
B
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, (supra)
along with the documents mentioned therein within 30 days.”
C 14. In the interregnum, the FCPL and FRL approached the Division
Bench of the Delhi High Court in FAO (OS) (COM) No.50 and 51 of
2021 respectively against the 2nd impugned order passed by the learned
Single Judge which was stayed vide Order dated 22.03.2021.
15. Subsequently, Amazon filed SLP (C) Nos. 6113-6114 of 2021
D before this Court against the order dated 22.03.2021 passed by the
Division Bench of the High Court.
16. This Court consolidated all the appeals filed by Amazon before
this Court, heard the matters together and passed a final judgment dated
06.08.2021, answering only the following two legal questions:
E i. Whether an Emergency Arbitrator’s Award can be said to
be within the contemplation of the Arbitration Act?
ii. Whether an order passed under Section 17(2) of the
Arbitration Act, in enforcement proceedings, is appealable
under Section 37 of the Arbitration Act?
F 17. This Court answered the first question in the following manner:
“41. We, therefore, answer the first question by declaring that full
party autonomy is given by the Arbitration Act to have a dispute
decided in accordance with institutional rules which can include
Emergency Arbitrators delivering interim orders, described as
G “awards”. Such orders are an important step in aid of decongesting
the civil courts and affording expeditious interim relief to the parties.
Such orders are referable to and are made under Section 17(1) of
the Arbitration Act.”
The second question was answered thus:
H
FUTURE COUPONS PRIVATE LIMITED v. AMAZON.COM NV 311
INVESTMENT HOLDINGS LLC [N. V. RAMANA, CJI]
“76. The second question posed is thus answered declaring that A
no appeal lies under Section 37 of the Arbitration Act against an
order of enforcement of an Emergency Arbitrator’s order made
under Section 17(2) of the Act. As a result, all interim orders of
this Court stand vacated. The impugned judgments of the Division
Bench, dated 8th February, 2021 and 22nd March, 2021, are set
B
aside. The appeals are disposed of accordingly.”
18. It may be noted that this Court, in the aforesaid judgment of
06.08.2021, did not adjudicate upon the merits of the case and limited its
reasoning only to answer the legal questions which arose therein. On a
reading of this judgment, the contention of the learned Senior Advocate
Mr. Gopal Subramanium, that this Court has upheld the Emergency C
Arbitrator Award and did not interfere with the enforcement orders in
OMP (ENF)(Comm.) No. 17 of 2021, on merits, is not correct. Although,
the judgment narrates the facts leading up to the appeal, the Court neither
returned any findings on facts, nor adjudicated on merits of the Order
passed by Justice Midha in the enforcement proceedings. It is this gap D
which has led to the current round of litigation on merits of the case for
the second time before this Court.
19. In the meanwhile, FRL filed an application under Para 10 of
Schedule 1 of the SIAC Rules for vacating the Award of the Emergency
Arbitrator before the Arbitral Tribunal. The oral submissions on the vacate E
petitions were heard between 12th-16th of July 2021 and orders were
reserved.
20. Contemporaneously, aggrieved by the merits of the orders of
the Single Judge dated 02.02.2021 and 18.03.2021, FCPL and FRL
preferred appeals directly before this Court in SLP (C) No. 13547-48 of
2021 and SLP (C) No. 13556-57 of 2021, respectively. On 09.09.2021 F
the following interim order was passed by this Court:-
“Heard learned senior counsel for the parties at length and
carefully perused the material placed on record.
Issue notice.
G
Taking into consideration the submissions advanced by
the learned senior counsel for the parties and particularly
the fact that the parties have approached the Singapore
International Arbitration Centre for vacating the Emergency
Award passed by the Emergency Arbitrator and the
H
312 SUPREME COURT REPORTS [2022] 12 S.C.R.
A arguments in the said matter have been ssconcluded and
the order is going to be pronounced shortly, we think it fit to
balance the interest of both the parties by staying all further
proceedings before the Delhi High Court for the time being.
Ordered accordingly. We further direct to all the authorities
i.e. NCLT, CCI and SEBI not to pass any final order for a
B
period of four weeks from today. This order has been
passed with the consent of both the parties.
List these matters after four weeks.”
(Emphasis supplied)
C 21. Thereafter, the applications filed by FRL and FCPL for vacating
the award of the Emergency Arbitrator was dismissed by the Arbitral
Tribunal by Order dated 21.10.2021.
22. The aforesaid order of the Arbitral Tribunal, rejecting the vacate
petition, was challenged by FCPL and FRL before the Delhi High Court
in Arb. Pet. No. 63 of 2021 and Arb. Pet. No. 64 of 2021. In Arb. Pet.
D No. 64 of 2021, FRL had filed IA No. 14285/2021, seeking the following
prayers:
a. Stay the operation of the impugned Order dated 21.10.2021
passed by the Hon’ble Arbitral Tribunal.
b. Alternatively, pass an order allowing the Appellant to take
E steps pursuing the scheme, subject to the condition that it
shall not invite the passing of any final orders of approval
of the scheme by the NCLT.
23. While issuing notice in both matters, by orders dated 29.10.2021
(3rd impugned Order), the Delhi High Court (Justice Suresh Kumar
F Kait) refused any immediate relief to FRL in the following words:
“15. During the course of hearing, this Court time and again
referred that when the subject matter of this appeal is pending
sub-judice before the Hon’ble Supreme Court in Special Leave
Petition (Civil) No. 13547- 48/2021 and infact, by virtue of order
G dated 09.09.2021 proceedings before this Court have been stayed
and also directions have been passed to NCLT, CCI, SEBI to not
pass any final order, then how interim relief, that too without there-
being any hearing or any reply from side opposite on record,
application for interim stay can be heard and orders be passed.
Upon this, Mr. Harish Salve, learned senior counsel submitted in
H such eventuality, this Court may dismiss the application.
FUTURE COUPONS PRIVATE LIMITED v. AMAZON.COM NV 313
INVESTMENT HOLDINGS LLC [N. V. RAMANA, CJI]
16. In view of the above, the application seeking interim stay being A
IA No. 14285/2021 (u/S 151 CPC) is accordingly dismissed.”
24. Aggrieved by the aforesaid order, FCPL and FRL have
approached this Court in SLP (C) Nos. 18089 and 18080 of 2021
respectively.
25. Mr. Harish Salve, learned Senior Counsel appearing for FRL B
submitted that the orders in the enforcement proceedings have been
rendered while completely disregarding the order dated 21.12.2020 passed
by the learned Single Judge of the Delhi High Court in CS(Comm) No.
493 of 2020, particularly, the finding that FRL does not have any arbitration
agreement with the respondent. He further submitted that although an C
appeal has been filed against the aforesaid order of the learned Single
Judge, there is no stay operating against the said order.
26. The learned Senior counsel also submitted that the impugned
orders passed in the enforcement proceedings merit setting aside as the
said proceedings have been conducted contrary to the principles of natural D
justice. He submitted that the procedure adopted has caused serious
prejudice to the appellants as, after denying them an opportunity to file a
reply affidavit, the impugned orders in the Enforcement proceedings
recorded that FRL had not made any plea on the issue as to why were
the orders of the Emergency Arbitrator a nullity.
E
27. Thirdly, the learned Senior counsel contended that the impugned
orders passed in the Enforcement proceedings extended beyond the scope
of the Emergency Arbitrator’s interim Award, by directing recall of the
approvals granted by the Statutory Authorities.
28. Lastly, while relying upon the Singapore Arbitration Rules,
F
learned Senior counsel submitted that the Tribunal’s interim order dated
21.10.2021, overrides the Emergency Arbitrator’s interim Award which
are the subject matter of the impugned enforcement proceedings. As a
result, the enforcement proceedings and the impugned order have lost
their relevance due to the subsequent events.
29. Mr. Mukul Rohatgi, learned Senior Counsel appearing for G
FCPL and their promoters, while supplementing the submissions of Mr.
Salve, specifically contended that the impugned order merits setting aside
due to grave injustice caused to the appellants due to the principles of
natural justice being given a go-by. No opportunity was granted for filing
of any response which has resulted in various factual and legal errors H
314 SUPREME COURT REPORTS [2022] 12 S.C.R.
A creeping in the impugned order. He further submitted that considering
the procedure followed by it, the penal orders passed by the High Court
in the impugned order, merit a reconsideration.
30. Learned Senior counsel further submitted that no prejudice
would be caused to Amazon by setting aside the impugned order passed
B in the enforcement proceedings or by the passing of an interim measure
allowing continuation of the proceedings before the NCLT. In fact, this
Court, vide order dated 22.02.2021, has already created an interim
arrangement by allowing the NCLT proceedings to continue with a
direction to the NCLT not to pass any final order. On the other hand, the
impugned order dated 18.03.2021, directed recall of the approvals granted
C by the statutory authorities.
31. Mr. Gopal Subramanium, learned Senior Counsel appearing
for Amazon, submitted that the appellants, by their conduct have
demonstrated willful and intentional disobedience of the Emergency
Arbitrator’s interim Award, after agreeing for the Emergency Arbitrator.
D While he fairly stated that Amazon is not interested in pursuing the punitive
directions imposed on FCPL and others, he submitted that the Emergency
Arbitrator’s interim Award stands confirmed by the Arbitral Tribunal,
which must be abided by the appellants. Learned Counsel argued that
when no stay has been granted against the interim protection afforded
E to them by the Arbitral Tribunal, the appellants cannot operate in
contravention of the same and proceed to effectuate the scheme before
the NCLT. He lastly submitted that pending any challenge, the interim
orders passed by the Tribunal needs to be maintained and given effect
to, so as to uphold the effectiveness and sanctity of the arbitration process.
32. Mr. Aspi Chinoy, learned Senior Counsel appearing for Amazon
F contended that the appellants’ reliance on the order dated 21.12.20, passed
by the learned Single Judge of the Delhi High Court in the suit proceeding
is misplaced. He submitted that, in the first instance, the suit instituted by
FRL before the Delhi High Court was of the nature of an anti-arbitration
suit and a collateral challenge to the arbitration proceedings which is in
G contravention to Section 5 of the Arbitration Act. He further submitted
that the observations being relied upon by the appellants were made in
an order declining the relief sought by them before the Delhi High Court.
Finally, the learned Senior counsel submitted that no relief should be
granted to the appellants by this Court as they have not approached this
Court with clean hands having failed to comply with any judicial order
H that has been passed.
FUTURE COUPONS PRIVATE LIMITED v. AMAZON.COM NV 315
INVESTMENT HOLDINGS LLC [N. V. RAMANA, CJI]
33. Having heard learned counsel for both the parties and on A
perusing voluminous documents submitted before the Court, the following
questions arise for our consideration :
I. Whether the orders dated 02.02.2021 and 18.03.2021,
passed by the learned Single Judge in OMP (ENF) (COM)
No.17 of 2021, are valid in law? B
II. Whether the orders dated 29.10.2021, passed by the learned
Single Judge in Arb. A (Comm.) No. 64 and 63 of 2021, is
valid in law?
Question No. I
34. The orders of the learned Single Judge [Justice Midha] in C
OMP (ENF) (COMM) No.17 of 2021, is impugned on the grounds of
lack of an opportunity granted to FCPL and FRL to file a counter to
establish their defense. Mr. Rohatgi, learned Senior Advocate appearing
on behalf of FCPL and its promoters has submitted that no time was
granted by the learned Single Judge to respond. He added that a 200-page D
order has been passed without any reply being filed on record and holding
everyone guilty of contempt of court. He has further submitted that punitive
directions could not have been passed even in contempt jurisdiction without
affording the party a proper opportunity of filing a reply.
35. In this context, our attention has been drawn to a catena of
E
procedural orders passed by the High Court in OMP (ENF) (COMM)
No.17 of 2021. From the record, we observe that FRL and FCPL were
not provided sufficient time or opportunity to file their counter or raise
their defense. On 29.01.2021, they were allowed to file a brief note of
submission within twenty-four hours, before orders were passed on
02.02.2021. F
36. On a perusal of the orders, we find that serious procedural
errors were committed by the learned Single Judge. Natural justice is an
important facet of a judicial review. Providing effective natural justice to
affected parties, before a decision is taken, is necessary to maintain the
Rule of law. Natural justice is usually discussed in the context of G
administrative actions, wherein procedural requirement of a fair hearing
is read in to ensure that no injustice is caused. When it comes to judicial
review, the natural justice principle is built into the rules and procedures
of the Court, which are expected to be followed meticulously to ensure
that highest standards of fairness are afforded to the parties.
H
316 SUPREME COURT REPORTS [2022] 12 S.C.R.
A 37. It is well known that natural justice is the sworn enemy of
unfairness. It is expected of the Courts to be cautious and afford a
reasonable opportunity to parties, especially in commercial matters having
a serious impact on the economy and employment of thousands of people.
Coming to the facts herein, the opportunity provided to the appellants
herein was insufficient, and cannot be upheld in the eyes of law.
B
38. Whenever an order is struck down as invalid being in violation
of the principles of natural justice, there is no final decision of the case
and fresh proceedings are left open. All that is done is to vacate the
order assailed by virtue of its inherent defect. Such proceedings are not
terminated and are usually remitted back. [See Canara Bank v. Debasis
C Das, (2003) 4 SCC 557] However, in this case, much water has flown
under the bridge, since the passing of the order by the learned Single
Judge, which has now been rendered redundant, for the following reasons
:
• Initially, this Court by order dated 22.02.2021, had allowed
D proceedings to continue before the NCLT without
finalization of the scheme.
• Thereafter, learned Single Judge passed the 2nd impugned
order on 18.03.2021, without considering the order of this
Court dated 22.02.2021.
E • Subsequently, the Division Bench in FAO (OS)(COM) No. 50
and 51 of 2021, had stayed the aforesaid order of the Single
Judge, which was taken in appeal again before this Court.
• This Court finally disposed of the case, answering only two
legal questions, without adjudicating on the merits of the
F matter.
• In the meanwhile, FRL and FCPL had moved the Arbitral
Tribunal, for vacating the interim injunction granted by the
Emergency Arbitrator.
• In view of the pendency of the aforesaid application before
G the Arbitral Tribunal, this Court again through interim order
dated 09.09.2021, allowed continuation of proceedings
before the NCLT, without final authorization on the scheme.
39. One aspect which may be highlighted is the punitive directions
ordered by the learned Single Judge in the order dated 18.03.2021, which
H are extracted below:
FUTURE COUPONS PRIVATE LIMITED v. AMAZON.COM NV 317
INVESTMENT HOLDINGS LLC [N. V. RAMANA, CJI]
“192. All the objections raised by the respondents are hereby A
rejected with cost of Rs.20,00,000/- to be deposited by the
respondents with the Prime Minister Relief Fund for being used
for providing COVID vaccination to the Below Poverty Line (BPL)
category - senior citizens of Delhi. The cost be deposited within a
period of two weeks and the receipt be placed on record within
B
one week of the deposit.
193. The respondents have deliberately and wilfully violated the
interim order dated 25th October, 2020 and are liable for the
consequences enumerated in Order XXXIX Rule 2A of the Code
of Civil Procedure.
194. In exercise of power under Order XXXIX Rule 2A(1) of the C
Code, the assets of the 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 D
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, (supra)
along with the documents mentioned therein within 30 days.”
E
40. Our attention is drawn to the fact that the learned Single Judge
had relied on M/s. Bhandari Engineers & Builders Pvt. Ltd. v. M/s.
Maharia Raj Joint Venture, 2019 SCC Online Del. 11879, which has
been overruled by a Division Bench order in Delhi Chemical and
Pharmaceutical Works Pvt. Ltd. & Anr. v. Himgiri Realtors Pvt.
Ltd. & Anr., EFA (OS) (Comm.) No. 4 of 2021. F
41. Viewed differently, contempt of a civil nature can be made
out under Order XXXIX Rule 2-A CPC not when there has been mere
“disobedience”, but only when there has been “wilful disobedience”.
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 G
disobedience was not mere “disobedience” but “wilful” and
“conscious”. This Court in the case of Ram Kishan v. Tarun Bajaj,
(2014) 16 SCC 204, considering the implication of exercise of contempt
jurisdiction, held that the power must be exercised with caution rather
than on mere probabilities. While delineating the conduct which can be
held to be “wilful disobedience”, this Court held that: H
318 SUPREME COURT REPORTS [2022] 12 S.C.R.
A “12. Thus, in order to punish a contemnor, it has to be established
that disobedience of the order is “wilful”. The word “wilful”
introduces a mental element and hence, requires looking into the
mind of a person/contemnor by gauging his actions, which is an
indication of one’s state of mind. “Wilful” means knowingly
intentional, conscious, calculated and deliberate with full knowledge
B
of consequences flowing therefrom. It excludes casual, accidental,
bona fide or unintentional acts or genuine inability. Wilful acts
does not encompass involuntarily or negligent actions. The act
has to be done with a “bad purpose or without justifiable excuse
or stubbornly, obstinately or perversely”. Wilful act is to be
C distinguished from an act done carelessly, thoughtlessly, heedlessly
or inadvertently. It does not include any act done negligently or
involuntarily. The deliberate conduct of a person means that he
knows what he is doing and intends to do the same. Therefore,
there has to be a calculated action with evil motive on his
part. Even if there is a disobedience of an order, but such
D
disobedience is the result of some compelling circumstances
under which it was not possible for the contemnor to comply
with the order, the contemnor cannot be punished.
“Committal or sequestration will not be ordered unless contempt
involves a degree of default or misconduct.”
E (Emphasis supplied)
42. Considering the fact that in the suit instituted by FRL, the
learned Single Judge had earlier allowed FRL and Amazon to continue
their pursuit before various regulatory authorities, and in view of the
interim orders of this Court dated 22.02.2021 and 09.09.2021, and the
F Courts below, we are inclined to set-aside aforesaid directions as the
pre-condition of ‘sufficient mental element for wilful disobedience’ is
not satisfied. Moreover, Mr. Gopal Subramanium, learned Senior
Advocate appearing for Amazon, has fairly stated that Amazon is not
interested in proceeding with the punitive directions. Taking note of the
G aforesaid submission, we set aside the punitive directions issued in the
impugned orders of learned Single Judge dated 02.02.2021 and 18.03.2021.
43. Coming to the merits of the case, we would like to mention a
disconcerting aspect wherein 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
H
FUTURE COUPONS PRIVATE LIMITED v. AMAZON.COM NV 319
INVESTMENT HOLDINGS LLC [N. V. RAMANA, CJI]
observations on the merits of the case, which would inevitably influence A
the Arbitral Tribunals hearing the matters on merit.
44. Therefore, we set aside the order of the learned Single Judge
dated 02.02.2021 and 18.03.2021 passed in OMP (ENF) (COMM.) No.17
of 2021.
Question No. II B
45. At the outset, it is agreed by learned advocates appearing on
both side that the impugned order dated 29.10.2021 in IA No. 14285/
2021 moved in Arb. A (Comm.) No. 64 of 2021, needs to be set aside for
non-consideration of the orders of this Court in the proper perspective.
Our order dated 09.09.2021, imposed no bar on the High Court to C
adjudicate the issue concerning legality of the vacate application order
by the Arbitral Tribunal. In our opinion, 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.
D
46. Further, 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.
E
47. In view of the above, we order:
I. Setting aside of impugned orders dated 02.02.2021 (1st
impugned Order) and 18.03.2021 (2nd impugned order) in
OMP (ENF)(Comm.) No. 17 of 2021.
II. Setting aside of 3rd impugned order dated 29.10.2021 in F
Arb. A. (Comm.) No. 64 and 63 of 2021.The learned Single
Judge shall reconsider the issues and pass appropriate
orders on its own merits, uninfluenced by any observation
made herein.
G
Ankit Gyan Matters remitted back.
(Assisted by : Mahendra Yadav, LCRA)
H
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