New Delhi, July 27: The Supreme Court Tuesday said it would decide whether Singapore's Emergency Arbitrator (EA) award, restraining Future Retail Ltd (FRL) from going ahead with its merger deal with Reliance Retail, was valid under Indian law and if it can be enforced. US-based e-commerce giant Amazon.com NV Investment Holdings LLC, and FRL are embroiled in a bitter legal fight over FRL's Rs 24,713 crore merger deal with Reliance Retail.
“We will decide whether EA award falls under section 17 (1) (which deals with interim award by arbitral tribunal) of the Arbitration and Conciliation Act. And if yes, then whether it can be enforced under section 17 (2) (of the Act),” said a bench comprising justices R F Nariman and B R Gavai.
The provisions of the Act deal with the interim measures ordered by an arbitral tribunal and section 17 (1) says: “Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute.” Supreme Court Says Can't Take Elitist View on Begging, They Have No Choice.
Section 17 (2) provides that the arbitral tribunal may require a party to provide appropriate security in connection with an interim measure ordered. The apex court's observations came when senior advocate Harish Salve, appearing for FRL, referred to judgements on validity and the enforceability of arbitral awards and said that there was no notion of EA under the Indian law on arbitration and conciliation and, in any case, there was no arbitration agreement to this effect.
Assailing the single-judge order which had given relief to Amazon by holding that EA's award was enforceable, Salve said it amounted to amending the Arbitration and Conciliation Act by construction.
“We will decide the matter of maintainability (of EA award) and whether the EA order is enforceable,” the bench said. There cannot be arbitral proceedings until a tribunal has been constituted with the power to pass an award, Salve said.
All arbitral awards have to be enforced under the Civil Procedure Code and not under the Arbitration law and hence, it cannot be said that FRL cannot take recourse to CPC in appealing against the EA's award and its legality, he said.
The hearing in the case would resume on Wednesday.
Earlier, Amazon had told the bench that the Biyanis of Future Group had negotiated with it to enter into certain agreements and are bound by Singapore's EA award restraining FRL from going ahead with its merger deal with Reliance Retail. It reiterated that EA's award was enforceable.
Kishore Biyani and 15 others including FRL and Future Coupon Pvt Ltd (FCPL) have been made parties by Amazon in a batch of pleas challenging the Delhi High Court order of the division bench which paved the way for the deal.
On February 22, in its interim order the apex court had asked the National Company Law Tribunal (NCLT) not to pass the final order related regulatory approvals for the amalgamation. Amazon moved the top court against the order of the Delhi High Court division bench which paved the way for the Reliance-FRL deal.
On February 8, the division bench had stayed the single-judge direction to FRL and various statutory authorities to maintain the status quo on the mega deal.
The interim direction was passed on FRL's appeal challenging the February 2 order of the single judge. Walmart's Flipkart Goes to Indian Supreme Court in Antitrust Case.
In August last year, the Future group had reached an agreement to sell its retail, wholesale, logistics, and warehousing units to Reliance. Subsequently, Amazon took FRL into EA before the SIAC over alleged breach of contract by the Future group. Amazon had first filed a plea before the high court (single judge) for enforcement of the October 25, 2020, EA award by Singapore International Arbitration Centre (SIAC) restraining FRL from going ahead with the deal with Reliance Retail.
The high court division bench had however said that it was staying the single-judge order as FRL was not a party to the share subscription agreement (SSA) between Amazon and FCPL and the US firm was not a party to the FRL-Reliance deal.
FRL, in its appeal, had claimed that if the February 2 order was not stayed it “would be an absolute disaster” for it as the proceedings before the NCLT for approving the amalgamation scheme have been put on hold.
It had contended that the single judge's status quo order will effectively derail the entire scheme which has been approved by statutory authorities in accordance with the law.
In its suit before the single judge for enforcing the EA award, Amazon has sought to restrain FRL from taking any steps to complete the transaction with entities that are part of the Mukesh Dhirubhai Ambani (MDA) Group. Amazon has also sought detention of the Biyanis, directors of FCPL and FRL and other related parties in civil prison and attaching of their properties for alleged “wilful disobedience” of the EA order.
After the SIAC's EA order, Amazon wrote to the Securities and Exchange Board of India (Sebi), stock exchanges and CCI, urging them to take into consideration the arbitrator's interim decision as it is a binding order.
FRL thereafter moved the high court to restrain Amazon from writing to Sebi, CCI, and other regulators about SIAC's order, saying it amounts to interfering with the agreement with Reliance.
A single judge on December 21 last year had on FRL's plea passed an interim order allowing Amazon to write to the statutory authorities, but also observed that prima facie it appeared the US e-commerce giant's attempt to control Future Retail was violative of FEMA and FDI rules. Against the observation, Amazon moved an appeal before a division bench and during its pendency, it filed the suit for the enforcement of the EA award.
(This is an unedited and auto-generated story from Syndicated News feed, LatestLY Staff may not have modified or edited the content body)