I. BRIEF BACKGROUND OF THE PERTINENT FACTS
The sudden twist within the flip of occasions was triggered by the order handed by the Competitors Fee of India (CCI) on December 17, 2021 (Revocation Order’), whereby the CCI, opposite to its earlier approval, determined to maintain in abeyance its preliminary order November 28, 2019 (Approval Order’) — the place the Fee was happy to approve Amazon’s proposed acquisition of 49 per cent of the shareholding of the Future Coupons beneath Part 6 of the Competitors Act, 2002.
It was contended earlier than the CCI by Amazon, that they’d the intention to strengthen and additional increase the enterprise of Future Coupons. On the premise of these representations, CCI granted the approval. By advantage of the proposed acquisition, Amazon sought to purchase strategic management over Future Retail by strategic funding into Future Coupons.
Furthermore after a criticism made by Future Coupons, the CCI vide the Revocation Order’ made scathing observations over Amazon’s conduct, whereby it has noticed that Amazon had intentionally’ made false statements and suppressed materials particulars in regards to the true nature of the proposed Mixture’ for which it sought the CCI’s approval.
In view of the surprising revelation of information and owing to Amazon’s willful misrepresentation’, the CCI was happy to maintain in abeyance the Approval Order’ that was earlier handed by it.
Moreover, the CCI issued instructions to Amazon ordering them to furnish contemporary particulars within the related Kind envisaged beneath the Mixture Rules, 2011 of the Competitors Act.
It is usually pertinent to be aware the exemplary and penal nature of the Revocation Order because the CCI was not hesitant in imposing a penalty of Rs 202 crore on Amazon for his or her mala fide and deliberate misconduct’ by which they misled’ the Fee by furnishing false particulars. It’s useless to say that such misconduct’ on the half of Amazon was tantamount to fraud and in flip was a violation of the public policy of India.
Parallel to the developments earlier than the CCI, the on-going Singapore Worldwide Arbitration Centre (SIAC) administered arbitral proceedings generated traction. Within the aftermath of the Revocation Order’ handed by the CCI, Future Retail & Future Coupons – the Respondents within the stated arbitral proceedings (collectively referred to as Future) have been every fast to want two purposes for Termination (Termination Software) of the arbitral proceedings beneath Part 32(2)(c) of the Arbitration & Conciliation Act, 1996 ( A&C Act).
The stated Termination Purposes’ have been predicated totally on the findings made by the CCI in its Revocation Order’, extra significantly with regard to Amazon’s fraudulent’ representations.
Additional, it was contended by the Future, that in view of the CCI’s findings in opposition to Amazon, it turned evident that Amazon couldn’t assert its proper over Future Coupons. Resultantly, the failure to shut Future Coupon’s Share Subscription Settlement (SSA) and the Shareholders Settlement (SHA) and the corresponding failure to execute the “single built-in discount” rendered the on-going arbitral proceedings “unattainable” inside the that means of Part 32(2)(c) of the A&C Act.
Thereafter, the Arbitral Tribunal (Tribunal) determined that it ought to proceed with a listening to on the substantive and evidentiary features of the matter earlier than listening to the Termination Purposes’.
Aggrieved by the Tribunal’s determination, the Future persistently urged the Tribunal to hear the Termination Purposes’ earlier than the evidentiary hearings within the mild of the impact that the Revocation Order’ had solid on the arbitral proceedings. Nonetheless, regardless of repeated assertions by the Future, the Tribunal vides its procedural orders dated December 29, 2021, December 30, 2021 & December 31, 2021 (impugned orders) declined to accede to any of the Future’s requests.
It’s useless to say, that the Future was aggrieved by the Tribunal’s refusal to hear the Termination Software’ prior to the evidentiary hearings. Due to this fact, the Future was fast to invoke their constitutional treatments beneath Article 226 & 227 of the Structure of India earlier than the Delhi Excessive Courtroom difficult the impugned orders. Accordingly, Future Retail and Future Coupons every most well-liked two petitions earlier than the Delhi Excessive Courtroom.
II. THE JUDGMENT OF THE SINGLE JUDGE
The Single Choose of the Delhi Excessive Courtroom was confronted with the query of whether or not he ought to train his jurisdiction beneath Article 226 & 227 of the Structure of India and thereby grant the aid sought by Future Retail and Future Coupons of their respective petitions. As each petitions arose from the identical arbitral proceedings and owing to the commonality of the impugned orders, the Single Choose proceeded to hear and determine each the petitions by passing a standard judgment.
Earlier than opining on whether or not the Courtroom ought to arbitrarily train its constitutional energy beneath Article 226 & 227 by interfering with the impugned orders of the Tribunal, the Courtroom laid down its opinion with regard to information on report and the Tribunal’s conduct in refusing to postpone the listening to of skilled witness.
From the paperwork on report, the Courtroom famous that the hearings from January 5 to 7, 2022 have been devoted to the Professional Listening to’ whereas the listening to on January 8, 2022 was to be for oral submissions on the Termination Purposes’.
In view of the factual place, the Courtroom rejected the Future’s rivalry that the Tribunal had not scheduled a day of receiving oral submissions on the Termination Purposes’.
The Single Choose proceeded to cause by making the commentary that the Tribunal had been greater than accommodating to each the events.
Moreover, it was contended by the Future that the listening to of the Termination Purposes’ ought to have taken precedence over the listening to of the skilled witness. It was contended that the Termination Purposes’ go to the very root of the matter and if the stated purposes have been allowed, the arbitral proceedings wouldn’t survive. Rejecting these contentions, the Courtroom held that there was no advantage within the submission that simply because the listening to of the skilled witnesses proceeded the
1. Judgment dated 4.01.2022 in CM(M) 2/2022 & CM No.176/2022
listening to for the Termination Purposes that the Tribunal was not keen to think about or discounted the advantage of the Termination Purposes.
Consolidating its opinion, the Single Choose reiterated that the administration of the arbitral course of lies with the arbitrator and that such contentions didn’t warrant any interference from Courtroom.
Moreover, the Courtroom laid emphasis and concurred with the reasoning employed by the Tribunal in its determination to schedule at some point for listening to the Termination Purposes’.
The Single Choose concluded discovering that there was no infirmity within the determination of the Tribunal in refusing to postpone the hearings of the skilled witnesses. The Courtroom noticed that acceding to such a request for adjournment would nonetheless derail arbitration proceedings.
So as to additional increase its reasoning, observations relating to the difficulties in scheduling contemporary dates for modern-day arbitrations have been made, as most frequently the involved events discover it tough to come to a consensus. Lastly, the Courtroom rejected all of the contentions put forth by the Future pertaining to difficulties that arose owing to the Covid-19 pandemic.
It’s our opinion that the reasoning employed by the Single Choose on this challenge is cogent and demonstrates enough utility of thoughts with respect to the proof on report. Nonetheless, it could not be out of place to be aware that the Courtroom has erred by failing to take cognizance of the bottom on which the Termination Purposes’ have been predicated i.e. the Revocation Order’.
As rightfully put ahead by the Future that the CCI’s Revocation of Amazon’s Mixture would go to the very root of the maintainability of the arbitral proceedings. It is usually pertinent to be aware that within the occasion that the Tribunal finds advantage within the grounds of the Termination Purposes’, the complete arbitral course of can be rendered infructuous.
It’s our opinion that such an consequence would nonetheless have resulted in large waste of prices incurred by each events in pursuing the arbitral proceedings pending the disposal of the Termination Purposes’.
It is usually our opinion that the Single Choose has erred by failing to take cognizance of the findings made by the nation’s apex anti-trust regulatory physique and the resultant ramifications within the Revocation Order’.
After laying enough emphasis on the factual particulars and the Tribunal’s conduct in refusing to postpone the evidential hearings, the Courtroom was confronted with the query of whether or not it may train its jurisdiction beneath Article 226 & 227 of the Structure of India and thereby intervene with the impugned orders.
The Single Choose proceeded to focus on the settled place of regulation by counting on the judgment of the Apex Courtroom in Deep Industries v ONGC 2 (Deep Industries’).
The Supreme Courtroom in Deep Industries settled the query that the non-obstante embodied in Part 5 of the A&C Act doesn’t bar a celebration from assailing the order of an Arbitral Tribunal earlier than the Constitutional Courts beneath Article 226 & 227.
The Supreme Courtroom in Deep Industries, whereas protecting in thoughts the doctrine of minimal judicial interference, imposed fetters on the powers of the Courts by connoting that the Excessive Courts should be circumspect in exercising their extraordinary powers and should strictly invoke them when the resultant orders are “patently missing in inherent jurisdiction” 3.
In view of the aforesaid ruling of the Apex Courtroom in Deep Industries, the Single Choose was constrained to accede to the place that Courtroom may train jurisdiction beneath Article 227 and thereby intervene with orders handed by Arbitral Tribunals.
Nonetheless, the Single Choose held that there was a small window for interference with orders handed by arbitral tribunals and extra significantly when the orders are procedural in nature.
Furthermore, it was clearly enunciated in Surender Kumar Singhal v Arun Kumar Bhalotia (Surender Kumar Singhal) that the powers envisaged by Article 226 & 227 may be exercised in opposition to orders of the arbitral tribunals in “distinctive circumstances”. Making use of this criterion to the current,
Making use of this criterion to the current
2 2020 15 SCC 706
3 2020 15 SCC 706 at para 17 4 2021 SCC OnLine Del 3708
case the Single Choose refused to train the jurisdiction vested in it and thereby upheld the impugned orders.
It’s our opinion, that the distinctive circumstances envisaged in Deep Industries and Surender Kumar Singhal warranted utility to the information of the current case in view of Amazon’s fraudulent conduct. Nonetheless, the Single Choose has erred in making use of the dictum of the Apex Courtroom in Deep Industries.
III. THE ORDER OF THE DIVISION BENCH
Resultantly, the judgment of the Single Choose was challenged by Future earlier than the Division Bench of the Delhi Excessive Courtroom. The Division Bench was fast to be aware the observations made by the CCI within the Revocation Order.
The Division Bench noticed that the sooner Approval Order was now saved in abeyance and concurred with Future’s rivalry that the SSA & SHA between Amazon and Future Coupons turned unenforceable. Resultantly, the arbitration settlement was rendered unenforceable.
The Division Bench laid additional emphasis on the scathing observations made by the CCI in opposition to Amazon’s conduct and thereby held that opinion that the Tribunal ought to have thought-about listening to the Termination Purposes earlier than the evidential hearings. Accordingly, the judgment of the Single Choose and the arbitral proceedings have been stayed.
It’s our opinion that the Division Bench appropriately paid heed to the observations made by the CCI with regard to Amazon’s deceitful and fraudulent conduct and resultant ramifications of the Revocation Order and accordingly set-aside the judgment of the Single Choose.
5 Order dated 5.01.2022 in LPA 6/2022 & LPA 7/2022
It’s our opinion that the order of the Division Bench rightly set-aside the judgment of the Single Choose within the Petition filed by the Future in opposition to the Tribunal’s impugned orders.
It is usually our opinion that the order of the Division Bench has exemplified an strategy that may information Courts when they’re confronted with difficult conditions on whether or not to train their extraordinary powers beneath Article 226 & 227 of the Structure.
It’s true that the on-going arbitral proceedings between Amazon and the Future Group are being adjudicated by a global tribunal administered beneath the SIAC Guidelines, however in essence the arbitration nonetheless stays a domestic arbitration seated in New Delhi.
In view of the above, it’s crucial that the orders handed by top-regulatory bodies such because the CCI should be afforded satisfactory consideration by worldwide arbitral tribunals, in order that India’s domestic public policy and the India’s anti-trust framework isn’t thwarted for need of consideration by foreign arbitral tribunals.
It’s our opinion that order of the Division Bench has not solid any eclipse on the sacrosanct ideas of “ease of doing enterprise” and “investor confidence” in India. The Division Bench’s strategy is the truth is a welcome-step in reminding worldwide arbitral tribunals of their responsibility to pay satisfactory heed to the orders of sovereign bodies and to shield India’s domestic public policy.
(Hiroo Advani is an authority on arbitration regulation and one of solely two Indian legal professionals ever listed within the Worldwide Who’s Who of Business Arbitrators)
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