Explore the significant importance placed by the court on procedural fairness in legal proceedings, ensuring that all parties are granted ample opportunity to present their case. The blog delves into the court’s analysis of natural justice principles and the impact of procedural errors on judicial review in a complex legal scenario involving commercial matters and arbitration disputes.
Facts
- Emergency Arbitrator’s order is enforceable under Section 17(1) and 17(2) of the Arbitration and Conciliation Act.
- Respondents raised a vague plea of nullity without substantiation.
- Amazon initiated arbitration proceedings before SIAC against actions of respondents violating the court order.
- FRL filed an intra-court appeal against the stay order by the Single Judge.
- Emergency Arbitrator’s interim order is not nullity as alleged by respondent No.2.
- FRL decided to sell retail businesses and assets to Reliance due to financial difficulties.
- NCLT proceedings allowed to continue but not end in final order of sanction of scheme.
- Various appeals were filed by FCPL and FRL against the orders of the Single Judge before the Supreme Court.
- Amazon filed SLPs against orders of the Division Bench of the High Court.
- FCPL and FRL approached Division Bench against the impugned orders of the Single Judge, which were stayed.
- CCI and SEBI approved the composite Scheme proposed by FRL-Reliance.
- Parallel litigation ongoing in various courts regarding the Amazon-Future dispute.
- The Delhi High Court (Justice Suresh Kumar Kait) refused immediate relief to FRL in the case.
- The order of the Arbitral Tribunal rejecting the vacate petition was challenged by FCPL and FRL before the Delhi High Court.
- The case was filed as Arb. Pet. No 63 of 2021 and Arb. Pet. No. 17 of 2021.
Also Read: Electoral Malpractices in Mayor Election
Issue
- Full party autonomy is granted by the Arbitration Act to have a dispute resolved according to institutional rules, including the use of Emergency Arbitrators to deliver interim orders.
- Emergency Arbitrator’s Awards fall within the scope of the Arbitration Act.
- The use of Emergency Arbitrator orders helps decongest civil courts and provide prompt interim relief to parties.
- No appeal is permitted under Section 37 of the Arbitration Act against an order enforcing an Emergency Arbitrator’s decision made under Section 17(2) of the Act.
Also Read: Balancing Power and Transparency: Electoral Bonds Struck Down, Disclosure Mandated
Arguments
- Senior counsel argues that impugned orders in enforcement proceedings were conducted contrary to principles of natural justice.
- Appellants were denied an opportunity to file a reply affidavit, causing prejudice.
- Senior counsel for FRL argues orders disregarded previous finding of lack of arbitration agreement.
- Senior counsel for FCPL and promoters argue grave injustice due to lack of natural justice principles being followed.
- No stay granted against interim protection by Arbitral Tribunal, appellants cannot proceed to effectuate the scheme before NCLT.
- Amazon’s counsel argues appellants’ reliance on previous court order is misplaced.
- Tribunal’s interim order overrides Emergency Arbitrator’s interim award in enforcement proceedings.
- No prejudice to Amazon by setting aside impugned order or allowing continuation of proceedings before NCLT.
- Amazon’s counsel points out appellants’ intentional disobedience of Emergency Arbitrator’s interim award.
- Impugned orders in enforcement proceedings extended beyond Emergency Arbitrator’s scope by recalling approvals granted by statutory authorities.
- High Court’s penal orders in impugned order need reconsideration due to lack of opportunity to respond.
- No time granted by the Single Judge to respond before passing a 200-page order holding everyone guilty of contempt.
- Punitive directions could not have been passed without affording the party a proper opportunity to file a reply.
- The suit instituted by FRL before the Delhi High Court was considered an anti-arbitration suit and a collateral challenge to the arbitration proceedings.
- Observations made by the appellants were in an order declining the relief sought by them before the Delhi High Court.
- No relief should be granted to the appellants by the Court as they have not approached with clean hands, failing to comply with judicial orders.
Also Read: Recall of Resolution Plan Approval: Legal Analysis
Analysis
- The High Court found serious procedural errors in the orders passed by the learned Single Judge.
- Respondents No. 1 to 13 are required to file an affidavit of their assets within 30 days.
- The principle of natural justice is crucial in judicial review to ensure fairness and uphold the rule of law.
- Courts need to provide a reasonable opportunity to parties, especially in commercial matters affecting the economy.
- The opportunity given to the appellants in this case was deemed insufficient and was not in line with the law.
- Invalid orders violating natural justice principles are struck down, leading to fresh proceedings.
- Natural justice is a vital aspect of judicial review, particularly in administrative actions to prevent injustice.
- The first substantive order on 02.02.2021 highlighted the lack of sufficient time given to FRL and FCPL to present their defense.
- Respondents were directed to file additional affidavits within 30 days, but the time given for submissions was limited to twenty-four hours.
- The balance of convenience was seen to favor both FRL and Amazon, indicating a complex legal scenario based on alleged breaches and representations.
- The High Court emphasized the importance of providing adequate time and opportunities to parties in legal proceedings.
- The court declined to grant interim injunction in favor of FRL against Amazon.
- The statutory authorities/regulators are directed to make a decision on the applications/objections as per the law.
- The balance of convenience is not in favor of FRL but in favor of Amazon.
- Important legal questions arise regarding the effect of an Emergency Arbitrator award and the jurisdiction of an Arbitral Tribunal.
- Amazon is not interested in proceeding with punitive directions.
- Contempt of a civil nature can be made out under Order XXXIX Rule 2-A CPC only in cases of ‘wilful disobedience’
- Proof of wilful disobedience is necessary and excludes casual, accidental, or unintentional acts
- Wilful act is consciously intentional and calculated with full knowledge of consequences
- Contempt jurisdiction must be exercised cautiously and with consideration of the contemnor’s state of mind
- Proceedings for wilful disobedience are usually remitted back for further consideration
- The judgement under review has been rendered redundant due to subsequent orders and actions by higher courts
- Contempt involves a deliberate conduct where the contemnor knows and intends their actions
Decision
- The impugned orders dated 02.02.2021 and 18.03.2021 in OMP (ENF)(Comm.) No 17 of 2021 are set aside.
- Procedural orders passed by Justice Midha in OMP (ENF) (COMM) No.17 of 2021 are reproduced.
- The respondents are directed to maintain status quo as on 28.01.2021 until the pronouncement of the reserved order.
- Respondents are to file an affidavit within 10 days detailing actions taken after 25th October, 2020.
- Cost to be deposited within two weeks and receipt placed on record within one week.
- All concerned authorities to maintain status quo and file a status report within 10 days.
- Respondent No.2 to respond to the petitioner’s brief note of submissions.
- Assets of respondents No.1 to 13 are attached under Order XXXIX Rule 2A(1) of the Code of Civil Procedure.
- Reconsideration of issues and passing appropriate orders on its own merits by the learned Single Judge.
- All objections raised by respondents rejected with cost of Rs.20,00,000/- to be deposited for COVID vaccination of Below Poverty Line senior citizens in Delhi.
Case Title: FUTURE COUPONS PRIVATE LIMITED Vs. AMAZON.COM NV INVESTMENT HOLDINGS LLC (2022 INSC 129)
Case Number: C.A. No.-000859-000860 / 2022
