Paragraph numbers below are the court’s original numbering, recovered from the source text.
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 go-by. No opportunity was granted for filing of any response which has resulted in various factual and legal errors FUTURE COUPONS PRIVATE LIMITED v. AMAZON.COM NV INVESTMENT HOLDINGS LLC [N. V. RAMANA, CJI] 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 anti-arbitration 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 : 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 200-page 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 twenty-four 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. FUTURE COUPONS PRIVATE LIMITED v. AMAZON.COM NV INVESTMENT HOLDINGS LLC [N. V. RAMANA, CJI]
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 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.” 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 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”. 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: FUTURE COUPONS PRIVATE LIMITED v. AMAZON.COM NV INVESTMENT HOLDINGS LLC [N. V. RAMANA, CJI] “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 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 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 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 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: 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. Ankit Gyan Matters remitted back. (Assisted by : Mahendra Yadav, LCRA) FUTURE COUPONS PRIVATE LIMITED v. AMAZON.COM NV INVESTMENT HOLDINGS LLC [N. V. RAMANA, CJI]