Future v Amazon: "35,000 Jobs Will Be Saved, Banks Will Be Paid, No Shops Will Be Closed If Reliance Deal Goes Through" Future Group Lawyers To Supreme Court

In the Amazon-Future case, the Future Group on Thursday submitted before the Supreme Court that if Future Retail Ltd's deal with the Reliance goes through, 35000 jobs will be saved, no shops will be closed, Banks will be paid out as well, and FRL's debt will be paid to the last rupee.

Senior Advocate Harish Salve appearing for Future Retail was arguing in favour of NCLT proceedings with regard to Future- Reliance deal being permitted to continue.

A Bench comprising Chief Justice of India NV Ramana, Justice AS Bopanna and Justice Hima Kohli orally asked Senior Advocate Harish Salve to file his submissions on this aspect through an affidavit.

During the hearing, Mr Salve submitted that FRL should be allowed to go ahead with the steps of the scheme as several meetings will have to be held. He added that the Court may hold in the interim that no final order will be made to sanction the merger scheme and no transfer of assets will happen, so Amazon would be protected.

After Revocation Of Amazon's approval by CCI, No Enforceable Agreement In Place & Hence No Enforceable Injunction: Future

Senior Advocate Mukul Rohatgi appearing for Future Coupons Private Ltd argued that the Competition Commission of India has withdrawn the "blessings" given to the agreement between FCPL and Amazon, which contained the arbitration clause.

Mr Rohatgi was referring to CCI's order revoking the approval granted to Amazon holding that Amazon's conduct was fraudulent and imposing a fine of 200 crores.

He submitted that there is no enforceable agreement in India as far as CCI's order operates, and if there's no agreement enforceable in India, the arbitration clause also perishes. Therefore there is no enforceable arbitration injunction as there's no contract recognised in India today.

According to Mr Rohatgi, as there's no operative injunction allowing Future to go further few more steps is of no loss to anyone.

"Amazon as of today has no legs to stand on, the arbitration agreement is in main agreement and main agreement is today non est in view of CCI's order. There's no impediment in Supreme Court allowing us to go a few steps ahead." Mr Rohatgi said.

Direction To Delhi High Court To Dispose Appeals Remanded By Supreme Court: FRL

Senior Advocate Harish Salve urged the Court to request the Delhi High Court to hear and dispose of the appeals that were remanded back by the Top Court on 1st Feb.

The appeals remanded back to High Court were filed challenging High Court's orders directing coercive steps against Future group and the order refusing to stay the Singapore Arbitration Tribunal's refusal to vacate the Emergency Award which restrained Future's deal with Reliance.

"Today one of the points in my appeal is if there is at all an arbitration agreement. If High Court holds there's no arbitration agreement there's an end to all my problems and my scheme goes through." Salve said

Mr Salve submitted that their appeal is against a Tribunal's award, and the primary question is if there is an arbitration agreement at all. According to him, if these issues are decided by the High Court a lot of other issues will fall into place.

He added if the High Court dismisses the appeals, they will know that the order of injunction passed by the Emergency Arbitrator (and upheld by Tribunal) is going to be in place, and then bankruptcy may be the only way out. However if appeals are allowed and injunction gets thrown away, then their Reliance scheme would go through and all the issues will get sorted.

He suggested that in the meanwhile, FRL can talk to the banks and see if they can reach some arrangement.

Injunction Order Subsists Till Date: Amazon

Senior Advocate Gopal Subramanium appearing for Amazon submitted that the injunction order passed by the Emergency Arbitrator on 25 October 2020 has not been varied or reversed in appeal and hence the same is in force as of today.

FRL's Objection To Jurisdiction Of Tribunal Already Dismissed: Amazon

With regard to FRL's objection to Tribunal's jurisdiction, Mr Subramanium submitted that the same was a jurisdictional objection and has been dismissed under section 16 of the Arbitration Act by the Tribunal on 20th October 2021.

He argued that if that being a partial order, it can be challenged in final award only, and not before the Delhi High Court in an appeal filed under Section 37 as proposed by Mr Salve.

"It can be challenged only in a final award, I have never heard something as preposterous as this, that a partial order by an Arbitral Tribunal rejecting Mr Salve's submissions, it can be only challenged in final award. Mr Salve says he will argue it in the Section 37 appeal? In fact if I may say so, when your Lordships remanded the matter, everything is been remanded, everything being taken to Single Judge and the Single judge has to examine matter de novo", he said.

(The order being referred to here by Mr Subramanium was a Partial Award on Jurisdiction passed by Singapore Arbitration Tribunal on 20th October 2021, dismissing FRL's application objecting to the Tribunal's jurisdiction).

Invoking the arbitration agreement, Amazon had initiated Arbitration against Future under the Arbitration Rules of the Singapore International Arbitration Centre. Accordingly, on 11 March 2021, FRL filed its Jurisdictional Objection Application pursuant to Section 16 of the Indian Arbitration and Conciliation Act, 1996 and Rule 28 of the SIAC Rules. FRL has requested, and the Tribunal had accepted, to decide the Jurisdictional Objection Application as a preliminary matter.

Can Delhi HC's Single Judge Look Into Question of Jurisdiction De Novo ?: Bench asks Amazon

Responding to the Court's query, Mr Subramanium submitted that the question of jurisdiction is an objection maintainable under Section 16 of the Arbitration Act, and FRL's objection has already been dismissed. The only way to challenge such an award is when a final award is rendered under section 34 of the Act.

"They want this appeal to go on, get arbitral proceedings injuncted, and apart from challenging it under Section 34 he is challenging it under an appeal under section 37? That's not allowed", Mr Subramanium said

Mr Salve however objected to Mr Subramanium's submission and stated that there can't be an interim order by a Tribunal for which there's no jurisdiction.

Interim Arrangement Capable Of Displacing Tribunal's Order Can Only Be Passed In Proceeding Challenging Tribunal's Order: Amazon

Mr Subramanium submitted that an interim arrangement which can virtually displace order of arbitral tribunal can only be passed in a proceeding which challenges order of the arbitral tribunal. However, no appeal has been filed by FRL challenging the injunction order of the Emergency Arbitrator.

According to him, if the order of the Arbitral Tribunal (reinforcing order of Emergency Arbitrator) had to be challenged, the order of Emergency Arbitrator should have been subjected to an appeal under Section 37, and in that appeal an order suspending, modifying, varying or annulling the order could've been passed.

He pointed out that there is no appeal against Emergency Arbitrator's 25th October order at all. The only order appealed is that of the Arbitration Tribunal dated 21s October 2021, which has been directed to be decided by the High Court's Single Judge.

Interim Order Cannot Outlive Final Order: Amazon

Mr Subramanium pointed that various interim orders have been passed in the present dispute, however the interim orders were vacated once the final orders were passed.

So according to Mr Subramanium, the Supreme Court's interim order in Future's SLP permitting NCLT to continue the proceedings will also be vacated once as it was subjected to Arbitration Tribunal's order dismissing FRL's application to vacate the Emergency Arbitrator's order. 

"There's no concept of interim order which outlives a final order. Even your Lordships order of 9th September 2021 which gave up a quietus for 4 weeks based on consent was subject to arbitral order dealing with application to vacate the order, that was dismissed. That being so, any interim relief which has tendency to interfere or be at odds with what arbitral tribunal has injuncted ( the injunction is also against carriage of proceedings before any tribunal authorities), please leave it to the High Court", Mr Subramanium said.

Proceedings Will Take 1-2 Years To Conclude, If Proceedings Go On Before NCLT, What Is The Loss? Bench to Amazon

Addressing Mr Subramanium, the CJI stated that according to the present situation, bankruptcy proceedings are about to be initiated against FRL, proceedings are pending before High Court which will take 1-2 years to conclude.

"If subject to prohibiting other side not to alienate the property, if you allow proceedings before NCLT to go on, whats the loss?" CJI asked

Mr Subramanium submitted that the NCLT proceedings were dependent on number of prior actions as many approvals had to be obtained. He added that all those approvals were obtained by FRL in contravention to the Tribunal's injunction order.

"There's something in law called 'fruits of a poison tree'. If you act in derogation and violation of an order of a court, as that's what this court had held that order of tribunal is equivalent to an order of court, if it is then you would find there are no intervening equities to a party in default to be permitted to pursue a proceeding, the initiation of which was contrary to courts order." Mr Subramanium said.

Mr Salve submitted that these proceedings with regard to the scheme will take time, and the Transfer of assets will come only after step 15.

FRL's Prayer For Continuation Of NCLT Proceedings In Derogation Of Subsisting Injunction Order: Amazon 

Senior Advocate Aspi Chinoy appearing for Amazon, submitted that what FRL wants in effect is for the Court to permit NCLT proceedings which is in derogation of the injunction order which is subsisting, and it hasn't been challenged by them.

In response to Court's statement that FRL has sought the relief through the SLP's filed by it (decided by Supreme Court on 1 Feb) Mr Chinoy submitted that FRL had challenged the Enforcement order of the High Court in the SLP but it never challenged the injunction. 

According to him, FRL is using some sort of collateral proceedings asking the Court to vacate injunction order, which if done will leave Amazon remedy-less. If they want a relaxation of the injunction order, they should file an appeal.

Responding to Rohatgi's submission regarding absence of any enforceable arbitration agreement, Mr Subramanium said "Am I to believe that order of Tribunal without being challenged has evaporated? Mr Salve is saying there's no injunction, Mr Rohatgi is saying there's no agreement. Where do i stand?"

The Bench has reserved its orders on the issue. 

Background

The Emergency arbitrator through its order dated 25th October 2020 has restrained FRL from going forward with its deal with Reliance and injuncted FRL from taking steps in furtherance of the Scheme (Scheme of Arrangement with Reliance). The Arbitral Tribunal constituted to hear Future-Amazon dispute reinforced the Emergency Arbitrator's order on October 21, 2021, and dismissed FRL's plea to vacate the order of the Emergency Arbitrator.