Amazon-Future dispute: SC sets aside high court orders
The Supreme Court on Tuesday set aside the Delhi high court’s adverse orders passed in February and March 2021 against the Future Group at the instance of US-retail giant Amazon over the former’s proposed $3.4 billion sale of retail assets to Reliance.
A bench, headed by Chief Justice of India (CJI) NV Ramana, held that coercive orders on attachment of properties of Kishore Biyani and other promoters of the Future Group were passed by the high court without giving sufficient opportunity to them, and that there was no wilful disobedience on the part of the group’s companies.
In a setback for Amazon, the bench, which also comprised justices AS Bopanna and Hima Kohli, referred the matter back to the Delhi high court to reconsider all issues afresh and deliver a judgment on the enforceability of the arbitral awards and other orders passed by the Singapore International Arbitration Centre (SIAC).
“The learned single judge (of Delhi HC) shall reconsider the issues and pass appropriate orders on its own merits, uninfluenced by any observation made herein,” directed the court while nixing high court orders dated February 2, 2021 and March 18, 2021.
Delivering the verdict on a clutch of petitions arising out of the previous orders of the high court, the top court also set aside the HC order of October 29, 2021 which refused to stay SIAC’s emergency award.
“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,” said the bench, adding that the high court order enforcing SIAC’s award had erroneously adopted a standard beyond ‘prima facie view’, as required under law.
The high court’s single-judge orders of February and March 2021 put the Future-Reliance deal on hold on the basis of SIAC’s restraining order.
By an order in October 2020, SIAC had , on a plea by Amazon, stopped Future from acting on its resolution to go ahead with its deal with Reliance until the Delhi-seated tribunal finally decided the matter. The Delhi high court’s justice JR Midha’s bench affirmed the SIAC’s emergency arbitrator (EA) order and also ordered for attachment of properties of Kishore Biyani and other promoters of the Future Group. The single judge further issued a show-cause notice to Biyani and others as to why they should not be sent to civil prison, leading Future to approach the top court in August 2021.
Simultaneously, Future moved the arbitral tribunal asking for a vacation of the interim stay against it but SIAC refused to lift its restraint by an order in October 2021.
In its 32-page judgment, the Supreme Court remained critical of the orders passed by the single judge as it accepted Future’s contention that a 200-page order was passed without any reply filed by Future and holding everyone guilty of contempt of court.
“On a perusal of the (HC) 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,” said the bench.
The court added: “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.”
It further noted that coercive orders passed on March 18, 2021 were in the nature of contempt proceedings but there existed no element of wilful disobedience on the part of Future. “We are inclined to set aside aforesaid directions as the precondition of ‘sufficient mental element for wilful disobedience’ is not satisfied,” held the bench.
The court, on January 11, reserved its verdict in the case while underlining the latest turn of event whereby SIAC rejected Future’s application to vacate the restraining order. The court observed at the time that the previous orders of the single-judge bench may not be relevant anymore and therefore, the high court should be asked to decide the case in the light of new developments.
The court had also indicated it would set aside the high court order, imposing a penalty of ₹ 20 lakh on Biyani and other directors of the Group and issuing a show-cause notice as to why they should not be sent to civil prison for breaching SIAC’s order.
Senior advocate Harish Salve, representing Future, had agreed to remitting the matter back to the Delhi high court as he also highlighted that Future Group is in a financially precarious situation and that 30,000 employees of Future Retail will lose their jobs if their deal with Reliance do not go through.
Senior lawyer Gopal Subramanium, who represented Amazon in the case, had emphasised that Future must be held bound by SIAC’s restraining order even if the matter was to go back to high court for a decision on merits.
However, the high court orders have been set aside in entirety, leaving Amazon to press for a restraining order against Future afresh.
Meanwhile, the bench also took up a fresh petition filed by Future Retail Ltd (FRL) to be spared the non-performing asset (NPA) tag on its accounts owing to its failure to repay the banks. The court asked the consortium of banks to respond to FRL’s petition by Thursday.
A consortium of 27 banks, including some private and foreign banks, had lent money to FRL and issued “event of default” notices to the company after it missed its repayment deadline. The grace period after the deadline lapsed on January 29.
Any quote from Reliance, Future, Amazon?