Disobedience Has To Be "Wilful" To Attract Civil Contempt Action Under Order XXXIX Rule 2A CPC : Supreme Court In Future-Amazon Case

While setting aside the order of the Delhi High Court which initiated coercive steps against the Future Group companies and its promoters, the Supreme Court of India on Tuesday observed that contempt of a civil nature can be made out under Order XXXIX Rule 2­A of the Code of Civil Procedure only when there has been "wilful disobedience" and not on mere "disobedience".

According to the Court, 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".

A Bench comprising Chief Justice of India NV Ramana, Justice AS Bopanna and Justice Hima Kohli therefore set aside the punitive directions issued by Delhi High Court's Single Judge against the Future Group companies and its promoters saying that the pre­condition of 'sufficient mental element for wilful disobedience' is not satisfied.

The judgment authored by CJI Ramana stated :

"...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"

It is pertinent to note that in the earlier round of Future-Amazon case, a bench led by Justice Nariman had doubted the view that "wiflul disobedience" has to be proved for Order 30 Rule 2A CPC and said that a larger bench reference is needed on that.

Should Disobedience Of Injunction Be 'Wilful' To Invoke Order 39 Rule 2A CPC? Supreme Court Doubts Its Earlier Judgment

In a major relief to the Future Group, the Supreme Court has set aside the orders dated 02.02.2021 and 18.03.2021 passed by a single judge of the Delhi High Court ordering coercive steps against Future group and the order dated 29.10.2021 which refused to stay the Singapore Arbitration Tribunal's refusal to vacate the Emergency Award which restrained Future's deal with Reliance.

The Supreme Court has remanded the matters to the Delhi High Court.

Future Group Not Provided Sufficient Time, Procedural Errors Committed By Delhi High Court: 

The Bench has observed that Future Retail (FRL) and Future Coupons (FCPL) were not provided sufficient time or opportunity to file their counter or raise their defence and were allowed to file a brief note of submission within twenty¬ four hours, before orders were passed.XI

According to the Bench, serious procedural errors were committed by the Single Judge of the Delhi High Court.

The Bench has further observed that Natural justice is an important facet of a judicial review and providing effective natural justice to affected parties, before a decision is taken, is necessary to maintain the Rule of law.

Natural Justice Principle Built Into Rules & Procedures Of Court Which Are Expected To Be Followed Meticulously:

The Court observed that as far as Natural justice in the context of administrative actions, the procedural requirement of a fair hearing is read in to ensure that no injustice is caused. However , 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.

Courts Expected To Be Cautious & Afford Reasonable Opportunity To Parties:

While stating that natural justice is the sworn enemy of unfairness, the Bench has observed that 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.

The Bench concluded that the opportunity provided to the appellants before the Single Judge was insufficient, and cannot be upheld in the eyes of law.

Courts Expected To Be Cautious While Making Observations On Merits Of Case:

With regards to the merits of the case, the Court observed that 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." the Bench said

Matter Needs To Be Remitted Back To Decide Important Questions of Law:

With regard to the Delhi High Court's order dated 29.10.2021 which refused to stay the Singapore Arbitration Tribunal's refusal to vacate the Emergency Award which restrained Future's deal with Reliance, the Bench has observed that 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.

The Bench also clarified that Supreme Court's 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. The Bench has opined that 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.

A Bench comprising Chief Justice of India NV Ramana, Justice AS Bopanna and Justice Hima Kohli delivered its judgement in the following two pleas:

• Special Leave Petitions of Future Coupons Private Ltd and Future Retail Ltd against Delhi High Court's Single Bench March 2021 order directing attachment of assets of Future group companies and its promoters for breach of Emergency Award (order passed by a single bench of Justice Midha). In the order dated 18.03.2021, Justice Midha confirmed the earlier order dated 02.02.2021 which directed status quo on FRL-Reliance deal.

• Special Leave Petitions of both FRL and FCPL challenging Delhi HC's 29th Oct order which refused to stay the Singapore Arbitration Tribunal's refusal to vacate the Emergency Award restraining it to continue with Reliance deal.

 Case Titles: Future Retail Ltd v Amazon.com Investment Holdings & Ors, Future Coupons Pvt Ltd & Ors vs Amazon.com Investment Holdings & Ors

Citation : 2022 LiveLaw (SC) 114