Delhi HC dismisses Future group pleas to terminate arbitration proceedings in Singapore
The Future group suffered a setback on Tuesday when the Delhi high court dismissed petitions filed by two Kishore Biyani-owned entities – Future Coupons Pvt Ltd (FCL) and Future Retail Ltd – seeking a court directive to the Singapore International Arbitration Centre’s arbitral tribunal to first decide on the Indian retailer’s application for termination of all proceedings.
The two Future group entities had argued that the arbitration proceedings could not continue in the light of the Competition Commission of India’s ruling withdrawing its approval to the 2019 transaction under Amazon acquired a 49 per cent stake in FCL and an indirect stake in Future Retail Ltd.
The arbitral tribunal had passed three orders in the last days of December through which it rejected the Future group’s plea for halting all proceedings in the main case until it ruled on the Biyani petition.
The Singapore tribunal said the December 17 order of the CCI was appealable and could not, therefore, “form the basis for the termination of the arbitration proceedings”.
The tribunal has scheduled hearings between January 5 and 7 when it will hear expert witnesses in the case arising from the dispute between Amazon and the Future group.
Amazon has been trying to assert its preemptive right to block a Rs 24,731 crore deal between Future Retail and Reliance Retail that was struck in August 2020.
The Reliance group has extended its deadline for the closure of the deal till March 31 this year.
A single judge bench of Justice Amit Bansal today dismissed the pleas moved by Future Retail Ltd (FRL) and Future Coupons Pvt Ltd (FCPL) to declare continuation of arbitration proceedings as contrary to law, even as it also sought a direction to the tribunal to decide the termination applications filed by them on December 23, 2021 before continuing with the arbitration proceedings.
“There is nothing to suggest that the arbitral tribunal has denied equal opportunity to the parties or that the arbitral tribunal has not been accommodating towards requests of the petitioners. Mere fixation of tight timelines or denial of requests for adjournment by the arbitral tribunal or deciding the order in which the arbitral tribunal considers the applications filed by the parties cannot be reason enough to contend that the orders of the arbitral tribunal are perverse or lacking in inherent jurisdiction,” Justice Bansal said in his 21page order.
He added that “no exceptional circumstances or perversity” have been demonstrated or made out in the petitions or during the hearing to warrant the exercise of jurisdiction by the Court under Article 227 of the Constitution of India.
This article states that every high court shall have superintendence over all courts and tribunals throughout the territories in relation to which it exercises jurisdiction.
The Future group firms had filed their petition under this Article. On the question whether the court can interfere with orders passed by the arbitral tribunal in December, Justice Bansal quoted a Supreme Court order while saying that there was only a a very small window for interference with orders passed by the arbitral tribunal while exercising jurisdiction under Article 227.
“The said window becomes even narrower where the orders passed by the arbitral tribunal are procedural in nature. Therefore, this window cannot be used for impugning case management orders passed by the arbitral tribunal, which are in the nature of procedural orders. Such orders are completely in the domain and discretion of the arbitral tribunal, and include orders relating to the scheduling of the arbitration proceedings or the order in which applications filed by the parties are to be considered or the timelines in relation to the arbitration proceedings,” Bansal added.
Bansal added that the Court, in exercise of jurisdiction under Article 227, cannot dictate to a duly constituted arbitral tribunal, the manner and the procedure of carrying out the arbitration proceedings.
Senior advocate Mukul Rohatgi, appearing for FCPL, had argued before the high court that the threemember arbitration tribunal was acting perversely by not deciding the issue of termination of the ongoing arbitration on a priority basis in view of the antitrust regulator holding that the approval granted to Amazon for its agreement with FCPL, which formed the basis of the arbitration, was facilitated by fraud.
Appearing for FRL, senior advocate Harish Salve had submitted that the tribunal should first take up the termination application and defer the proceedings on other issues.
However, senior advocates Gopal Subramanium and Amit Sibal, appearing for Amazon, said the date for hearing on the Future group’s termination application had been fixed for January 8 so as to give sufficient time for the parties to file their written submissions.