Viewed differently, contempt of a civil nature can be made out
under Order XXXIX Rule 2A 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”. 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:
“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 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
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
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.”
(Emphasis supplied)
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 859-860 OF 2022
FUTURE COUPONS PRIVATE LIMITED & ORS Vs AMAZON.COM NV INVESTMENT HOLDINGS LLC
Author: N.V. RAMANA, CJI .
1. Leave granted in all matters.
2. These appeals are against various orders of Delhi High Court
connected to the AmazonFuture
dispute. Civil Appeals arising
out of SLP (C) No. 1354748
of 2021 and SLP (C) No. 1355657
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 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 ShareSubscription
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
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:
Clause 10 of SHA:
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/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 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.
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
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 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.
5. As in March 2020, FRL submitted that there was business
downturn due to Covid19
lockdowns as there were
restrictions on retail sale through brickandmortar
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 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.
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
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 conclusions which are juxtaposed
herein below:Order
of Emergency Arbitrator
dated 25.10.2020
Order of Single Judge Bench
in I.A. No. 10376 of 2020 in
CS(COMM) No. 493 of 2020
dated 21.12.2020
285. In the result, I award, direct,
and order as follows:
(a) the Respondents are
injuncted from taking
any steps in furtherance
or in aid of the Board
Resolution made by the
Board of Directors or
FRL on 29 August 2019
in relation to the
Disputed Transaction,
including but not limited
to filing or pursuing any
application before any
person, including
regulatory bodies or
agencies in India, or
requesting for approval
at any company meeting;
(b) the Respondents are
injuncted from taking
any steps to complete
the Disputed
Transaction with entities
that are part of the MDA
12.3 Thus the trinity of the
principles for grant of interim
injunction i.e. prima facie case,
irreparable loss and balance of
convenience are required to be
tested in terms of principles as
noted above. Since this Court
has held that prima facie the
representation of Amazon
based on the pea that the
resolution dated 29th August,
2020 of FRL is void and that
on conflation of the FCPL SHA
and FRL SHA, the ‘control’ that
is sought to be asserted by
Amazon on FRL is not
permitted under the FEMA FDI
Rules, without the
governmental approvals, this
Court finds that FRL has made
out a prima facie case in its
favour for grant of interim
injunction. However, the main
tests in the present case are in
respect of “balance of
Group;
(c) without prejudice to the
rights of any current
Promoter Lenders, the
Respondents are
injuncted from directly
or indirectly taking any
steps to
transfer/dispose/alienat
e/encumber FRL’s Retail
Assets or the shares
held in FRL by the
Promoters in any
manner without the
prior written consent of
the Claimant;
(d) the Respondents are
injuncted from issuing
securities of FRL or
obtaining/securing any
financing, directly or
indirectly, from any
Restricted Person that
will be in any manner
contrary to Section
13.3.1 of the FCPL SHA;
(e) the orders in (a) to (d)
above are to take effect
immediately and will
remain in place until
further order from the
Tribunal, when
constituted; and
(f) the Claimant is to
provide within 7 days
from the date hereof a
crossundertaking
in
damages to the
Respondents. If the
Parties are unable to
agree on its terms, they
convenience” and “irreparable
loss”. Even if a prima facie
case is made out by FRL, the
balance of convenience lies
both in favour of FRL and
Amazon. If the case of FRL is
that the representation by
Amazon to the statutory
authorities/regulators is based
on illegal premise, Amazon has
also based its representation
on alleged breach of FCPL SHA
and FRL SHA, as also the
directions in the EA order.
Hence it cannot be said that
the balance of convenience lies
in favour of FRL and not in
favour of Amazon. It would be
a matter of trial after parties
have led their evidence or if
decided by any other
competent forum to determine
whether the representation of
Amazon that the transaction
between FRL and Reliance
being in breach of the FCPL
SHA and FRL SHA would
outweigh the plea of FRL in the
present suit. Further in case
Amazon is not permitted to
represent its case before the
statutory
authorities/Regulators, it will
suffer an irreparable loss as
Amazon also claims to have
created preemptive rights in its
favour in case the Indian law
permitted in future. Further
there may not be irreparable
loss to FRL for the reason even
if Amazon makes a
are to refer their
differences to me qua EA
for resolution; and
(g) the costs of this
Application be part of
the costs of this
Arbitration.
representation based on
incorrect facts thereby using
unlawful means, it will be for
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 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 statutory
authorities/regulators and
now it is for the Statutory
Authorities/Regulators to
take a decision thereon.
Therefore, this Court finds
that no case 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 FRL, however, the
Statutory
Authorities/Regulators are
directed to take the decision on
the applications/objections in
accordance with law.
8. In the meanwhile, CCI and SEBI approved the composite
Scheme proposed by FRLReliance.
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).
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 the learned Single Judge, Justice Midha, in OMP
(ENF) (COMM) No.17 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.
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.
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.
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 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:
“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 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:
“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, 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.
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 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
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 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.”
11. Aggrieved by the stay order granted by the learned Single
Judge, while reserving the matter, FRL filed an intracourt
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 only a prima facie view for the
purpose of grant of interim relief and shall not
come in the way of the learned Single Judge in
passing 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. 285657
of 2021. Vide order dated 22.02.2021,
this Court interalia
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)
13. Again on 18.03.2021, the learned Single Judge in OMP (ENF)
(COMM) No.17 of 2021, passed the 2 nd impugned order with
aforesaid directions:
“188. The Emergency Arbitrator is an Arbitrator
for all intents and purposes; order of the
Emergency Arbitrator is an order under 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 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.
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 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 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 B1
and respondents No.3 to 11 are
directed to file an additional affidavit in the
format of Annexure A1
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.”
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. 61136114
of 2021
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:
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?
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 “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:
“76. The second question posed is thus answered
declaring that 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 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
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
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 petitions were heard between 12th16th
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.
1354748
of 2021 and SLP (C) No. 1355657
of 2021,
respectively. On 09.09.2021 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.
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 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 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)
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. 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 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 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 subjudice
before the Hon’ble Supreme Court in Special
Leave Petition (Civil) No. 1354748/
2021 and
infact, by virtue of order 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 therebeing
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 such
eventuality, this Court may dismiss the
application.
16. In view of the above, the application seeking
interim stay being 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
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 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 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.
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,
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
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 goby.
No opportunity was granted for
filing of any response which has resulted in various factual
and legal errors 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 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 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. 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 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 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 antiarbitration
suit and a collateral challenge to the arbitration
proceedings which is in 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 that has been passed.
33. Having heard learned counsel for both the parties and on
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?
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 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 200page
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
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 twentyfour
hours, before orders were passed on 02.02.2021.
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 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.
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.
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 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 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.
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 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 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 are extracted below:
“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 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 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 affidavit in the
format of Annexure B1
and respondents no.
3 to 11 are directed to file an additional
affidavit in the format of Annexure A1
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.”
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.
41. Viewed differently, contempt of a civil nature can be made out
under Order XXXIX Rule 2A 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”. 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:
“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 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
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
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.”
(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 Courts below, we are
inclined to setaside
aforesaid directions as the precondition
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 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 observations on the merits of the case,
which would inevitably influence 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
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 nonconsideration
of the orders of this
Court in the proper perspective. Our order dated 09.09.2021,
imposed no bar on the High Court to 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.
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.
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
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.
...........................................CJI.
(N.V. RAMANA)
..............................................J.
(A.S. BOPANNA)
..............................................J.
(HIMA KOHLI)
NEW DELHI;
FEBRUARY 01, 2022
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