R.F.NARIMAN, J. - (1.) Two important questions arise in these appeals - first, as to whether an "award" delivered by an Emergency Arbitrator under the Arbitration Rules of the Singapore International Arbitration Centre ["SIAC Rules"] can be said to be an order under Section 17(1) of the Arbitration and Conciliation Act, 1996 ["Arbitration Act"]; and second, as to whether an order passed under Section 17(2) of the Arbitration Act in enforcement of the award of an Emergency Arbitrator by a learned Single Judge of the High Court is appealable.
(2.) The brief facts necessary to appreciate the context in which these two questions arise are as follows: 2.1. Proceedings were initiated by the Appellant, Amazon.com NV Investment Holdings LLC ["Amazon"] before the High Court of Delhi under Section 17(2) of the Arbitration Act to enforce the award/order dated 25th October, 2020 of an Emergency Arbitrator, Mr. V.K. Rajah, SC. This order was passed in arbitration proceedings being SIAC Arbitration No. 960 of 2020 commenced by Amazon against Respondents No. 1 to 13, who are described as under: (i) Respondent No.1 - Future Retail Limited, India's second-largest offline retailer ["FRL"] (ii) Respondent No.2 - Future Coupons Pvt. Ltd., a company that holds 9.82% shareholding in FRL and is controlled and majority-owned by Respondents No. 3 to 11 ["FCPL"] (iii) Respondent No.3 - Mr. Kishore Biyani, Executive Chairman and Group CEO of FRL (iv) Respondent No.8 - Mr. Rakesh Biyani, Managing Director of FRL (v) Respondents No. 4 to 7 and 9 to 11 - other members of the Biyani family, namely, Ms. Ashni Kishore Biyani, Mr. Anil Biyani, Mr. Gopikishan Biyani, Mr. Laxminarayan Biyani, Mr. Sunil Biyani, Mr. Vijay Biyani, and Mr. Vivek Biyani, who are promoters and shareholders of FRL (vi) Respondents No. 12 and 13 - Future Corporate Resources Pvt. Ltd. and Akar Estate and Finance Pvt. Ltd., group companies of FRLRespondents No. 1 to 13 are hereinafter collectively referred to as the "Biyani Group". 2.2. The seat of the arbitral proceedings is New Delhi, and as per the arbitration clause agreed upon by the parties, SIAC Rules apply. 2.3. Three agreements were entered into between the parties. A Shareholders' Agreement dated 12th August, 2019, was entered into amongst the Biyani Group, i.e., Respondents No. 1 to 13 ["FRL Shareholders' Agreement"]. Under this Shareholders' Agreement, FCPL was accorded negative, protective, special, and material rights with regard to FRL including, in particular, FRL's retail stores ["retail assets"]. The rights granted to FCPL under this Shareholders' Agreement were to be exercised for Amazon's benefit and thus were mirrored in a Shareholders' Agreement dated 22nd August, 2019 entered into between Amazon, FCPL, and Respondents No. 3 to 13 ["FCPL Shareholders' Agreement"]. Amazon agreed to invest a sum of Rs.1431 crore in FCPL based on the rights granted to FCPL under the FRL Shareholders' Agreement and the FCPL Shareholders' Agreement. This investment was recorded in the Share Subscription Agreement dated 22nd August, 2019 entered into between Amazon, FCPL, and Respondents No. 3 to 13 ["ShareSubscription Agreement"]. It was expressly stipulated that this investment in FCPL would "flow down" to FRL. It appears that the basic understanding between the parties was that Amazon's investment in the retail assets of FRL would continue to vest in FRL, as a result of which FRL could not transfer its retail assets without FCPL's consent which, in turn, could not be granted unless Amazon had provided its consent. Also, FRL was prohibited from encumbering/transferring/selling/divesting/disposing of its retail assets to "restricted persons", being prohibited entities, with whom FRL, FCPL, and the Biyanis could not deal. A list of such restricted persons was then set out in Schedule III of the FCPL Shareholders' Agreement and also under the FRL Shareholders' Agreement vide letter dated 19th December, 2019. There is no doubt that the Mukesh Dhirubhai Ambani group (Reliance Industries group) is a "restricted person" under both these Shareholders' Agreements. 2.4. On 26th December, 2019, Amazon invested the aforesaid sum of Rs.1431 crore in FCPL which "flowed down" to FRL on the very same day. The bone of contention between the parties is that within a few months from the date of this investment, i.e., on 29th August, 2020, Respondents No. 1 to 13 entered into a transaction with the Mukesh Dhirubhai Ambani group which envisages the amalgamation of FRL with the MukeshDhirubhai Ambani group, the consequential cessation of FRL as an entity, and the complete disposal of its retail assets in favour of the said group. 2.5. Amazon initiated arbitration proceedings and filed an application on 5th October, 2020 seeking emergency interim relief under the SIAC Rules, asking for injunctions against the aforesaid transaction. Mr. V.K. Rajah, SC was appointed as the Emergency Arbitrator and heard detailed oral submissions from all parties and then passed an "interim award" dated 25th October, 2020, in which the learned Arbitrator issued the following injunctions/directions: "B. Dispositive Orders/Directions 285. In the result, I award, direct, and order as follows: (a) the Respondents are injuncted from taking any steps in furtherance or in aid of the Board Resolution made by the Board of Directors of FRL on 29 August 2020 in relation to the Disputed Transaction, including but not limited to filing or pursuing any application before any person, including regulatory bodies or agencies in India, or requesting for approval at any company meeting; (b) the Respondents are injuncted from taking any steps to complete the Disputed Transaction with entities that are part of the MDAGroup; (c) without prejudice to the rights of any current Promoter Lenders, the Respondents are injuncted from directly or indirectly taking any steps to transfer/ dispose/ alienate/ encumber FRL's Retail Assets or the shares held in FRL by the Promoters in any manner without the prior written consent of the Claimant; (d) the Respondents are injuncted from issuing securities of FRL or obtaining/securing any financing, directly or indirectly, from any Restricted Person that will be in any manner contrary to Section 13.3.1 of the FCPL SHA; (e) the orders in (a) to (d) above are to take effect immediately and will remain in place until further order from the Tribunal, when constituted; and (f) the Claimant is to provide within 7 days from the date hereof a cross-undertaking in damages to the Respondents. If the Parties are unable to agree on its terms, they are to refer their differences to me qua EA for resolution; and (g) the costs of this Application be part of the costs of this Arbitration." 2.6. The Biyani Group thereafter went ahead with the impugned transaction, describing the award as a nullity and the Emergency Arbitrator as coram non judice in order to press forward for permissions before statutory authorities/regulatory bodies. FRL, consistent with this stand, did not challenge the Emergency Arbitrator's award under Section 37 of the Arbitration Act, but instead chose to file a civil suit before the Delhi High Court being C.S. No. 493 of 2020, in which it sought to interdict the arbitration proceedings and asked for interim relief to restrain Amazon from writing to statutory authorities by relying on the Emergency Arbitrator's order, calling it a "tortious interference" with its civil rights. A learned Single Judge of the Delhi High Court, after finding a prima facie case of tortious interference, then refused to grant any interim injunction as follows: "12.3 Thus the trinity of the principles for grant of interim injunction i.e., prima facie case, irreparable loss and balance of convenience are required to be tested in terms of principles as noted above. Since this Court has held that prima facie the representation of Amazon based on the plea that the resolution dated 29th August, 2020 of FRL is void and that on conflation of the FCPL SHA and FRL SHA, the 'control' that is sought to be asserted by Amazon on FRL is not permitted under the FEMA FDI Rules, without the governmental approvals, this Court finds that FRL has made out a prima facie case in its favour for grant of interim injunction. However, the main tests in the present case are in respect of "balance of convenience" and "irreparable loss". Even if a prima facie case is made out by FRL, the balance of convenience lies both in favour of FRL and Amazon. If the case of FRL is that the representation by Amazon to the statutory authorities /regulators is based on illegal premise, Amazon has also based its representation on the alleged breach of FCPL SHA and FRL SHA, as also the directions in the EA order. Hence it cannot be said that the balance of convenience lies in favour of FRL and not in favour of Amazon. It would be a matter of trial after parties have led their evidence or if decided by any other competent forum to determine whether the representation of Amazon that the transaction between FRL and Reliance being in breach of the FCPL SHA and FRL SHA would outweigh the plea of FRL in the present suit. Further in case Amazon is not permitted to represent its case before the statutory authorities/Regulators, it will suffer an irreparable loss as Amazon also claims to have created pre-emptive rights in its favour in case the Indian law permitted in future. Further there may not be irreparable loss to FRL for the reason even if Amazon makes a representation based on incorrect facts thereby using unlawful means, it will be for the statutory authorities/Regulators to apply their mind to the facts and legal issues therein and come to the right conclusion. There is yet another aspect as to why no interim injunction can be granted in the present application for the reason both FRL and Amazon have already made their representations and counter representations to the statutory authorities/regulators and now it is for the Statutory Authorities/Regulators to take a decision thereon. Therefore, this Court finds that no case for grant of interim injunction is made out in favour of the FRL and against Amazon. Conclusion 13. Consequently, the present application is disposed of, declining the grant of interim injunction as prayed for by FRL, however, the Statutory Authorities/Regulators are directed to take the decision on the applications/objections in accordance with the law." No appeal against this order has been filed by the Biyani Group. On the other hand, Amazon has filed an appeal against certain observations made in the order. This appeal is pending. 2.7. Meanwhile, Amazon went ahead with an application filed under Section 17(2) of the Arbitration Act which was heard and disposed of by a learned Single Judge of the Delhi High Court. On 2nd February, 2021, the learned Single Judge passed a status-quo order in which he restrained the Biyani Group from going ahead with the impugned transaction, stating that reasons and a detailed order will follow. An appeal against this was filed by FRL, in which a Division Bench, vide order dated 8th February, 2021, after setting out the facts of this case and after reaching certain prima facie findings, stayed the operation, implementation, and execution of the Single Judge order dated 2nd February, 2021 till the next date of hearing, and listed the appeal for further hearing on 26th February, 2021. Meanwhile, on 22ndFebruary, 2021, the Supreme Court allowed the amalgamation proceedings pending before the National Company Law Tribunal to continue, but not to culminate in any final order of sanction of scheme of amalgamation. 2.8. On 18th March, 2020, the learned Single Judge passed a detailed judgment giving reasons for an order made under Section 17(2) read with Order XXXIX, Rule 2-A of the Code of Civil Procedure, 1908 ["Code of Civil Procedure"] in which it was held that an Emergency Arbitrator's award is an order under Section 17(1) of the Arbitration Act. Since breaches of the Agreements aforementioned were admitted, the only plea being raised being that the Emergency Arbitrator's award was a nullity, the learned Single Judge held that such award was enforceable as an order under the Arbitration Act, and further held that the injunctions/directions granted by the said award were deliberately flouted by the Biyani Group. He also found that any so-called violations of Foreign Exchange Management Act, 1999 ["FEMA"] did not render the Emergency Arbitrator's award a nullity, and therefore, issued a show-cause notice under Order XXXIX, Rule 2-A of the Code of Civil Procedure, after imposing Rs.20 lakh as costs to be deposited with the Prime Minister Relief Fund for being used for providing COVID vaccinations to the Below Poverty Line category of senior citizens of Delhi. The learned Single Judge then directed as follows: "Conclusion 188. The Emergency Arbitrator is an Arbitrator for all intents and purposes; order of the Emergency Arbitrator is an order under Section 17(1) and enforceable as an order of this Court under Section 17(2) of the Arbitration and Conciliation Act. 189. Respondent No.2 is a proper party to the arbitration proceedings and the Emergency Arbitrator has rightly invoked the Group of Companies doctrine by applying the well settled principles laid down by the Supreme Court in Chloro Controls (supra), Cheran Properties (supra) and MTNL (supra). The respondents have raised a plea contrary to the well settled law relating to Group of Companies doctrine laid down by the Supreme Court. 190. The respondents have raised a vague plea of Nullity without substantiating the same. The interim order of the Emergency Arbitrator is not a Nullity as alleged by respondent No.2. 191. Combining/treating all the agreements as a single integrated transaction does not amount to control of the petitioner over FRL and therefore, the petitioner's investment does not violate any law. 192. All the objections raised by the respondents are hereby rejected with cost of Rs. 20,00,000/- to be deposited by the respondents with the Prime Minister Relief Fund for being used for providing COVID vaccination to the Below Poverty Line (BPL) category - senior citizens of Delhi. The cost be deposited within a period of two weeks and the receipt be placed on record within one week of the deposit. 193. The respondents have deliberately and wilfully violated the interim order dated 25th October, 2020 and are liable for the consequences enumerated in Order XXXIX Rule 2-A of the Code of Civil Procedure. 194. In exercise of power under Order XXXIX Rule 2-A(1) of the Code of Civil Procedure, the assets of respondents No.1 to 13 are hereby attached. Respondents No.1 to 13 are directed to file an affidavit of their assets as on today in Form 16A, Appendix E under Order XXI Rule 41(2) of the Code of Civil Procedure within 30 days. Respondent No.1, 2, 12 and 13 aredirected to file an additional affidavit in the format of Annexure B-1 and respondents No.3 to 11 are directed to file an additional affidavit in the format of Annexure A-1 to the judgment of M/s Bhandari Engineers and Builders Pvt. Ltd. v. M/s Maharia Raj Joint Venture, (supra) along with the documents mentioned therein within 30 days. 195. Show cause notice is hereby issued to respondents No.3 to 13 to show cause why they be not detained in civil prison for a term not exceeding three months under Order XXXIX Rule 2-A(1) of the Code of Civil Procedure for violation of the order dated 25th October, 2020. Reply to the show cause notice be filed within two weeks. Rejoinder within two weeks thereafter. 196. The respondents are directed not to take any further action in violation of the interim order dated 25th October, 2020. The respondents are further directed to approach all the competent authorities for recall of the orders passed on their applications in violation of the interim order dated 25th October, 2020 within two weeks. The respondents are directed to file an affidavit to place on record the actions taken by them after 25th October, 2020 and the present status of all those actions at least three days before the next date of hearing. 197. Respondents No.3 to 11 shall remain present before this Court on the next date of hearing." He listed the matter for further directions on 28th April, 2021. 2.9. Against this detailed judgment, FAO No. 51 of 2021 was filed by FRL. By the second impugned judgment in this case dated 22nd March, 2021, a Division Bench of the Delhi High Court referred to its earlier order dated 8th February, 2021 and stayed the learned Single Judge's detailed judgment and order for the same reasons given by the earlier order till the next date of hearing, which was 30th April, 2021. Against the said order, Special Leave Petitions were filed before this Court, and this Court by its order dated 19th April, 2021 stayed further proceedings before the learned Single Judge as well as the Division Bench of the Delhi High Court, and set the matter down for final disposal before this Court.
(3.) Mr. Gopal Subramanium, learned Senior Advocate appearing on behalf of Amazon, took us through the record with painstaking detail. He castigated the impugned orders of the Division Bench as suffering from a complete non-application of mind in that the order dated 8th February, 2021 referred to three agreements, the third being between FRL and Reliance Retail Ltd., which is an error apparent on the face of the record. Secondly, it went on to observe that in the aforesaid agreement, Amazon is not a party. It then went on to hold that an appeal against an order under Section 17(2) of the Arbitration Act would be maintainable under the provisions of the Code of Civil Procedure on the basis of the reasoning contained in a Delhi High Court judgment in South Delhi Municipal Corporation vs. Tech Mahindra, (2019) SCC Online Delhi 11863, relying upon paragraphs 8 to 11 thereof. Mr. Subramanium argued that had the learned Division Bench bothered to refer to paragraphs 12 and 13 of the aforesaid judgment, it would be clear that this authority would be an authority for exactly the opposite proposition, thereby rendering an appeal under Order XLIII, Rule1(r) of the Code of Civil Procedure non-maintainable when it is read with Section 37 of the Arbitration Act. Further observations that prima facie, the agreements are between different parties, and therefore, the group-of-companies doctrine cannot be invoked, without any reasoning, again betrays a complete non-application of mind. Since the second impugned order of the Division Bench relies upon this very order to stay even the detailed judgment of the Single Judge, the learned senior counsel argued that the second order, being a reiteration of the first, suffers from the same malady. 3.1. Mr. Subramanium then referred us to Sections 2(1)(a), 2(1)(c), 2(1) (d), 2(6), 2(8) and 19(2) to argue that the Arbitration Act reflects the grundnorm of arbitration as being party autonomy, which is respected by these provisions and delineated in several judgments of this Court. He then referred to Section 37, pointing out that an appeal under Section 37(2)(b) is restricted to granting or refusing to grant an interim measure under Section 17, which would refer to Section 17(1) and not Section 17(2). He went on to argue that the Arbitration Act is a complete code in itself and if an appeal does not fall within the four corners of Section 37, then it is incompetent, as has been held by several judgments of this Court. 3.2. He also referred to various judgments of this Court, arguing that an Emergency Arbitrator's award can never be characterised as a nullity and ignored, and cited a number of judgments to show that until the said award is set aside, it must be obeyed. He also referred to the important fact that the award must be taken as it stands as no appeal was made therefrom by the Biyani Group and that, therefore, it was not permissible to go behind the award. 3.3. He also cited judgments to show that non-signatories to arbitration agreements would nevertheless be bound thereby and on facts, it was admitted that the "Ultimate Controlling Person" behind the entire transaction was Mr. Kishore Biyani, who was defined as such under the three Agreements. 3.4. He also argued that, as has been held in the judgments of this Court, the FEMA is wholly unlike the Foreign Exchange Regulation Act, 1973 ["FERA"] and does not contain any provision nullifying an agreement, even assuming that there was a breach thereof. ;