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Delhi HC allows Future Group’s arbitration to continue

A single judge bench of Justice C Hari Shankar observed, "It is clarified that I have not expressed any opinion on the merits of the controversy between the parties and that the arbitral proceedings may continue unimpeded and uninfluenced by any observation contained in this judgment".

The top court bench headed by Chief Justice of India N V Ramana also quashed two other orders of the High Court over the dispute.

The Delhi High Court on Tuesday dismissed pleas moved by Kishore Biyani’s Future Coupons Private Limited (FCPL) seeking termination of arbitration proceedings moved by e-commerce platform Amazon before Singapore International Arbitration Centre over Future Retail Ltd.’s (FRL’s) Rs 24,731 crore merger deal with Reliance Retail.

A single judge bench of Justice C Hari Shankar observed, “It is clarified that I have not expressed any opinion on the merits of the controversy between the parties and that the arbitral proceedings may continue unimpeded and uninfluenced by any observation contained in this judgment”.

The issue dates back to 2020, when Amazon approached the Singapore International Arbitration Centre (SIAC) arguing that the Future Group’s deal with Mukesh Ambani-led Reliance Retail was a violation of their contract. The SIAC subsequently put the Future-Reliance deal on hold.

The Delhi High Court — in its October 29 verdict last year — said it will not interfere with SIAC’s order on the Rs 24,713 crore merger deal. The HC on February 2, 2021 had directed status quo to be maintained concerning the merger deal, and on March 18, 2021 it attached the properties of Future Group promoter Kishore Biyani and other officials linked to the company.

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The Supreme Court in February set aside these three high court orders which includes the order on attachment of properties of Future Group and its directors and the refusal to grant a stay on the final arbitral award which had restrained FRL from going ahead with its deal with Reliance while ordering fresh adjudication.

The top court bench headed by Chief Justice of India N V Ramana also quashed two other orders of the High Court over the dispute. It found “procedural errors” with the HC’s orders and said the Future Group was not provided “insufficient” opportunity while dealing with the pleas of US online retail giant Amazon.
SC remitted the ruling on the stay back to HC “for adjudication on its own merits” and said it raises “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”.

Future Group had argued in its plea that the Competition Commission of India in December 2021 had kept in abeyance the grant of clearance for the deal stating that Amazon had concealed from CCI certain details of its acquisition as required under the provisions of the Competition Act, 2002. Future’s plea states that the SIAC order failed to appreciate that CCI order is a legal barrier to continuation of arbitration proceedings, the plea stated.

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On the maintainability of the pleas under Article 227 (Power of superintendence over all courts by the High Court) of the Constitution, the HC observed that the impugned orders are interlocutory orders (which does not terminate the arbitration or bring it to an end) passed in arbitral proceedings, which cannot be challenged under Article 227 of the Constitution of India.

“Though learned Senior Counsel, at the very outset, sought to submit that, in the peculiar facts of the present case, these petitions ought to be entertained under Article 227, I am, having heard learned Senior Counsel, unable to discern any such peculiarity. The orders under challenge are, plainly, interlocutory orders. The order dated 28th June 2022, forming subject matter of challenge in CM (M) 1141/2022, rejects the petitioners’ application under Section 32(2)(c) of the 1996 Act, seeking termination of the arbitral proceedings,” the HC said. It was also noted that in case the arbitral proceedings deserved to be terminated in law, it would always be open to Future group to urge this and invoke Section 34 of the Arbitration Act “against any final Award that the learned Arbitral Tribunal may come to pass”.

The HC further referred to two orders of the apex court of April 4 and 6, wherein a joint memo was filed by both parties before the SC where one of the terms of consent was that “in the event of dismissal, by the learned Arbitral Tribunal, of the Termination Application filed by the petitioners and FRL, the learned Arbitral Tribunal could continue with the arbitration, conclude hearing and publish the award…The order dated 6th April 2022, passed by the Supreme Court, specifically disposed of SLP(C) 1705-1706/2022, in terms of the said Joint Consent terms, which were reproduced in extenso in the said order”. In view of the same the HC observed that any interdiction with the progress of the arbitral proceedings by the HC would be an “no less than an affront to the orders” of the Supreme Court diluting its effect in operation.

First published on: 23-11-2022 at 04:24 IST
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