A three-judge Bench of CJI NV Ramana, Justice AS Bopanna, and Justice Hima Kohli has set aside three orders of Delhi High Court including the order refusing to grant a stay on the final arbitral award which had restrained Future Retail Ltd from going ahead with its Rs 24,731 crore merger deal with Reliance Retail and ordered fresh adjudication.

While setting aside the orders, the Bench observed, "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."

Senior Advocates Harish Salve and Mukul Rohatgi appeared for FRL and FCPL respectively and Amazon was represented by Senior Lawyers Gopal Subramanium and Ranjit Kumar and others.

The two key issues that were dealt with by the Court were -

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.

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 I

In this context, the Apex Court noted that the orders of the Single Judge in OMP (ENF) (COMM) No.17 of 2021 were impugned on the ground of lack of opportunity granted to FCPL and FRL to file a counter to establish their defense.

Senior Advocate Mr. Mukul Rohatgi had contended before the Court that there was no time granted by the Single Judge to respond. Further, he argued that a 200-page order had been passed without any reply being filed on record and holding everyone guilty of contempt of Court.

Further, he pleaded those punitive directions could not have been passed even in contempt jurisdiction without affording the party a proper opportunity of filing a reply.

The Apex Court noted that from the records it could be observed that FRL and FCPL were not provided sufficient time or opportunity to file their counter or raise their defense.

Further, the Bench opined, "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," the Court held.

The Court held that 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 disobedience was not mere "disobedience" but "wilful" and "conscious," the Bench opined.

In this context, the Bench opined -

"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 Courts below, we are inclined to set­aside aforesaid directions as the pre­condition of 'sufficient mental element for wilful disobedience' is not satisfied."

The Court added that the opportunity provided to the Appellants was insufficient and cannot be upheld in the eyes of law.

The Bench also held in that in this case much water had flown under the bridge, since the passing of the order of the Single Judge which had become redundant.

The Court took note of the contention of the Senior Advocate Mr. Gopal Subramanium that Amazon is not interested in proceeding with the punitive directions, the Bench set aside the punitive directions issued in the impugned orders of the Single Judge dated 02.02.2021 and 18.03.2021.

The Court while observing that the interim order enforcing the Emergency Award (EA) had adopted a standard beyond 'prima facie view' as required under law, held –

"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."

In the light of these observations, the Court 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 II

The Apex Court concerning this issue noted that the Counsels appearing for both the parties had agreed that the impugned order dated 29.10.2021 in IA No. 14285/2021 moved in Arb. A (Comm.) No. 64 of 2021 needed to be set aside for non-consideration of the orders of this Court in the proper perspective.

The Bench held that its order dated 9.9.2021 imposed no bar on the High Court to adjudicate the issue concerning the legality of the vacate application order by the Arbitral Tribunal.

In this context, the Bench opined –

"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."

"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," the Court added.

The Court thus held that these matters needed to be remitted back for adjudication on its own merits before the Single Judge.

In the light of these observations, the Court –

  • Set aside the impugned orders dated 02.02.2021 (1st impugned Order) and 18.03.2021 (2nd impugned order) in OMP (ENF)(Comm.) No. 17 of 2021; and
  • Set aside the 02.02.2021 (1st impugned Order) and 18.03.2021 (2nd impugned order) in OMP (ENF)(Comm.) No. 17 of 2021 and remitted the issues back to the Single Judge for fresh adjudication.

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