2021 (2) TMI 1278 - HC - Companies Law

Enforceability of Emergency Arbitrator's Order under Arbitration Act

AMAZON. COM NV INVESTMENT HOLDINGS LLC Versus FUTURE COUPONS PRIVATE LIMITED & ORS.

The Court found the Emergency Arbitrator's order valid and enforceable under Section 17(2) of the Arbitration and Conciliation Act, 1996. The respondents ... Delay in the protection order - seeking enforcement of the order dated 25th October, 2020 passed by the Emergency Arbitrator - Section 17(2) of the Arbitration and Conciliation Act, 1996 read with Order XXXIX Rule 2A of the Code of Civil Procedure - HELD THAT:- This Court is of the prima facie view that the Emergency Arbitrator is an Arbitrator; the Emergency Arbitrator has rightly proceeded against the respondent No.2; the order dated 25th October, 2020 is not a nullity; the order dated 25th October, 2020 is an order under Section 17(1) of the Arbitration and Conciliation Act. This Court is of the view that the order dated 25th October, 2020 is appealable under Section 37 of the Arbitration and Conciliation Act. This Court is of the clear view that the order dated 25th October, 2020 is enforceable as an order of this Court under Section 17(2) of the Arbitration and Conciliation Act. This Court is satisfied that immediate orders are necessary to protect the rights of the petitioner till the pronouncement of the reserved order. In that view of the matter, the respondents are directed to maintain status quo as on today at 04.50 P.M. till the pronouncement of the reserved order. 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, within 10 days - All the concerned authorities are directed to maintain status quo with respect to all matters in violation of the order dated 25th October, 2020 and shall file the status report with respect to the present status within 10 days of the receipt of this order. The other prayers of the petitioner shall be considered in the reserved order. Issues involved:Enforcement of Emergency Arbitrator's order under Section 17(2) of the Arbitration and Conciliation Act, 1996.Analysis:1. Violation of Emergency Arbitrator's Order: The petitioner alleged that the respondents deliberately violated the Emergency Arbitrator's order dated 25th October, 2020, which led to irreparable harm. The petitioner sought immediate interim protection until the final order pronouncement to safeguard their rights.2. Legal Basis for Petition: The petitioner filed the petition under Section 17(2) of the Arbitration and Conciliation Act, 1996, coupled with Order XXXIX Rule 2A of the Code of Civil Procedure, to enforce the Emergency Arbitrator's order.3. Background and Arbitration Proceedings: The petitioner invested a significant amount based on agreements preventing the transfer of retail assets to restricted persons, including the MDA Group. Arbitration proceedings were initiated on 05th October, 2020, as per the Shareholders Agreement, resulting in the Emergency Arbitrator's appointment.4. Emergency Arbitrator's Order: The Emergency Arbitrator's order dated 25th October, 2020, directed the respondents to refrain from actions related to the disputed transaction, transfer of assets, issuing securities, or obtaining financing from restricted persons. The order emphasized maintaining status quo until further tribunal orders.5. Respondents' Objections: The respondents contested the enforceability of the Emergency Arbitrator's order on various grounds, including jurisdictional issues and the nature of the order.6. Court's Prima Facie View: The Court opined that the Emergency Arbitrator is valid, the order is enforceable under Section 17(2) of the Act, and appealable under Section 37. The Court deemed the order non-null and subject to enforcement as a court order.7. Interim Directions: To protect the petitioner's rights, the Court directed the respondents to maintain status quo, file affidavits detailing post-order actions, and instructed concerned authorities to report on the compliance status within 10 days.8. Final Orders: The Court reserved detailed reasons for its views and indicated that further prayers of the petitioner would be addressed in the final order. Copies of the interim order were to be provided to all relevant parties and authorities promptly.This comprehensive analysis encapsulates the legal nuances and proceedings of the case, highlighting the key aspects of the judgment delivered by the Delhi High Court.