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2021 (3) TMI 903
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....sh Agarwal, Mr. Rishi Agrawala, Mr. Karan Luthra, Mr. Pranjit Bhattacharyya, Mr. Ankit Banati, Advocates for R-1, R-3, R-12 and R-14 Mr. Harish Salve, Senior Advocate, Mr. Darius Khambata, Senior Advocate with Mr. Somasekhar Sundaresan, Mr. Ameet Naik, Mr. Raghav Shankar, Mr. Aditya Mehta, Mr. Tushar Hathiramani, Mr. Abhishek Kale, Ms. Madhu Gadodia, Mr. Harshvardhan Jha and Ms. Arshiya Sharda, Advocates for R-2, R-15 and R-16 Mr. Rohan Shah and Mr. Nakul Mohta, Advocates for R-4 to R-11 and R-13 JUDGMENT 1. The petitioner has filed this petition under Section 17(2) of the Arbitration and Conciliation Act, 1996 read with Order XXXIX Rule 2A and Section 151 of Code of Civil Procedure for enforcement of the interim order dated 25th October, 2020 passed by the Emergency Arbitrator. 2. The respondents have raised a legal objection to the maintainability of this enforcement petition on the ground that the Emergency Arbitrator is not an Arbitrator within the meaning of Section 2(1)(d) of the Arbitration and Conciliation Act; the interim order dated 25th October, 2020 is not an order under Section 17(1) and, therefore, not enforceable under Section 17(2) of the Arbitration and Co....
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....ecial, material protective/negative rights available to FCPL in FRL namely, that the Retail Assets of FRL would not be alienated without the petitioner's prior written consent, and never to a Restricted Person. FCPL and FRL further agreed that FRL would remain the sole vehicle for conduct of its retail business. The entire investment of Rs. 1431 Crore was invested by FCPL into FRL. FRL received the benefit of the Petitioner's entire investment of Rs. 1431 Crore. 8. Between 12th August 2019 and 22nd August 2019, the following agreements were executed between the following parties:- (i) Shareholders' Agreement dated 12th August 2019 between respondents No.1 to 13 (hereinafter referred to 'FRL - SHA'); (ii) Shareholders' Agreement dated 22nd August 2019 between petitioner and respondents No. 1, 3 to 13 (hereinafter referred to ' FCPL - SHA'); and (iii) Share Subscription Agreement dated 22nd August 2019 between petitioner and respondents No. 1, 3 to 13 (hereinafter referred to 'SSA'). 9. According to the petitioner, the Biyanis began breaching the Agreements, within months of its investment, by permitting their shareholding in FRL to get further encumb....
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....ara Bank, 2019 SCC Online SC 995; Chatterjee Petrochem v. Haldia Petrochemicals Ltd, (2014) 14 SCC 574; M/s Duro Felguera S.A. v. M/S Gangavaram Port Ltd., (2017) 9 SCC 729; and Ameet Lalchand Shah v. Rishabh Enterprises, (2018) 1SCC 678. Both the parties submitted their response to the aforesaid judgments. 16. The respondents raised an objection to the jurisdiction of the Emergency Arbitrator on various grounds inter-alia that Part I of the Arbitration & Conciliation Act does not contemplate a remedy before an Emergency Arbitrator; the appointment of an Emergency Arbitrator under SIAC Rules was invalid; any order granted by the Emergency Arbitrator would not have any force of law under the Arbitration and Conciliation Act; and 'Arbitral Tribunal' defined in Section 2(1)(d) of the Arbitration and Conciliation Act does not include an Emergency Arbitrator. 17. On 16th October, 2020, the learned Arbitrator heard all the parties through video conference facilities hosted by Maxwell Chambers, Singapore. 18. The Emergency Arbitrator passed an interim order on 25th October, 2020. The interim order records the contentions of all the parties, detailed analysis of their submissions ....
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.... the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings 100. In other words, the Indian Act allows parties to determine the arbitral procedure, which in the present case is manifested in the form of the SIAC Rules. This, in turn, envisages that such institutional rules may designate particular modalities and or an authorised body or person appointed in accordance with the institutional framework to determine an issue relating to the arbitration proceedings that have been initiated. The determination of an issue by such body or person is final and binding on the parties, subject to the provisions for limited review under the provisions of the Indian Arbitration Act 1996. 101. Section 2(8) of the Indian Arbitration Act 1996 expressly provides that where Part I of the Indian Arbitration Act 1996 refers to an "agreement of the parties", such agreement shall include the arbitration rules referred to in the parties' agreement. In this way, the Indian Arbitration Act 1996 provides that any arbitration rules agreed to by the parties are incorporated into the arbitration agreement. Unless expressly excluded, it ....
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....IAC, ICC, and LCIA into an arbitration agreement the Parties must be deemed to have agreed to allow for recourse to the emergency arbitration procedure and other remedies that have been expressly provided for. In these proceedings, the Parties by incorporating the SIAC Rules in their arbitration agreement have agreed to the following provisions: SCHEDULE 1 EMERGENCY ARBITRATOR 6. The Emergency Arbitrator shall have the power to order or award any interim relief that he deems necessary. The Emergency Arbitrator shall give reasons for his decision in writing. The Emergency Arbitrator may modify or vacate the interim award or order for good cause shown. ....................... 9. An order or award pursuant to this Schedule 1 shall be binding on the parties when rendered. By agreeing to arbitration under these Rules, the parties undertake to comply with such an order or award without delay. (emphasis in italics added) 104. To all intents and purposes the EA is the Tribunal and can as a result of the Parties' agreement exercise the powers to grant interim relief until the Tribunal is constituted. The Respondents ought to be held to this agree....
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....t grant final relief. That said there is no principle that precludes a tribunal or an emergency arbitrator from granting interim relief that might be similar to the final relief that is being requested; (b) Interim reliefs are aimed at maintaining the status quo pending the resolution of the dispute, preventing imminent harm or prejudice to the arbitral process, preserving assets, and preserving evidence; and (c) The emergency arbitrator only has the power to grant interim measures that have a temporary effect and cannot by his orders definitively resolve any dispute. 109. The ultimate source of any arbitrator's authority to order provisional measures is the parties' agreement to arbitrate - that is to say, in contract. An international arbitration agreement confers the authority to order provisional measures if this is expressly provided for in the adopted institutional rules unless the parties provide otherwise. The Parties' choice of the SIAC Rules (even for the FRL SHA, which embraced domestic rather cross border issues) clearly shows that they had the common intention to confer authority on an emergency arbitrator to order emergency provisional measu....
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....oned in an arbitration agreement made in writing, may enter into its ratione persone scope. 113. The Respondents accept that Section 25.2.1 of the FCPL SHA constitutes a valid arbitration agreement. The issue that arises is whether FRL is bound by that arbitration agreement in Section 25.2.1 of the FCPL SHA, and, therefore, de jure a "party" to this arbitration under Indian law. 114. FRL initially relied heavily on the decision rendered by a two-judge bench of the Supreme Court of India in Indowind Energy Ltd v Wescare (India) Limited & Another (2010) 5 SCC 306 ("Indo-wind"). 115. However, Indian law has made consequential strides since that decision. Non- signatories may now be bound by an arbitration agreement if the circumstances compellingly show that it was the mutual intention of all the parties to bind both signatories to the arbitration agreement as well as certain non-signatory entities. In Chloro, a three-judge bench of the Supreme Court of India held that a "non-signatory or third party could be subjected to arbitration without their prior consent, but this would be in exceptional cases." 116. As the Claimant points out, in Ch....
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.... (iii) [i]n the present case, as set out above, the intention of the parties clearly was to ensure that there was no contractual relationship between FRL and Amazon. Accordingly, whilst Amazon was not a party to the FRL SHA, FRL was not a party to the FCPL SHA. The FRL SHA and FCPL SHA also contain "entire agreement" clauses and "no agency clauses". This is the clear intention of the parties evident from the contractual clauses. The group of companies doctrine of implied consent cannot be used to override the clear meaning of a contract. ... (vi) The "group of companies" doctrine cannot be extended to bind a listed company to private agreements between shareholders which purport to impose restrictions on the functioning of the Board of Directors of the company and the transferability of the shares of the company, particularly when the listed company is not itself a party to the agreement sought to be enforce. Admittedly, the Articles of Association of FRL have not been amended to reflect the restrictions contemplated in the FCRL SHA. 120. On the other hand, the Claimant asserts that: FRL's objection is incorrect, and contradicted by (a) the content of the Agre....
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....ction 27.11 of the FCPL SHA and Section 16.11 of the FRL SHA, it adds, is entirely misplaced. Further, the circumstances set out in the Application show that FRL will be bound by the FCPL SHA owing to mutual intention of the Parties to bind both, signatories FCPL, Biyanis, FCRPL as well as non-signatories FRL. This is evident from the fact that the Parties engaged in conduct such as collective negotiations and undertaking acts and performance under the relevant contracts, as well as recognizing the FCPL SHA through statements, including public disclosures indicating the intention to be bound by the FCPL SHA in lieu of the benefits provided under the single integrated bargain. 123. FRL has a direct relationship with the Respondent companies, all of which are controlled by the Promoters and therefore, part of a group of companies, the Future Group, which comprises, inter alia, FCPL and FRL. There is direct commonality of subject matter, being the preservation of FRL's business, in general, and the Retail Assets. The inter-linkages of the clauses in the Agreements demonstrate that they constitute a single integrated transaction, with FRL being the beneficiary of the investmen....
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....s the existence of a single integrated bargain on the premise that Section 27.2 of the FCPL SHA is an "Entire Agreement" provision, which precludes the Claimant from construing the FCPL SHA together with the other relevant Agreements. 128. In response, the Claimant asserts that the effect of an Entire Agreement clause depends primarily on its terms, since it is the language chosen by the Parties to express their agreement. It serves a dual objective of clarifying firstly, that the instrument contains the entire agreement relating to the subject matter, to the exclusion of any further term that may be implied by law; and secondly, that the agreement will supersede any prior written or oral understanding between the Parties. By alluding to the existence of the single integrated transaction, the Claimant states that it is not attempting to imply any term into either the FCPL SHA or the FRL SHA. Equally, the Claimant is not attempting to include any prior written or oral understanding into the terms of the FCPL SHA or the FRL SHA. 129. The Claimant's investment into FCPL (including the protective, special and material rights granted to it with respect to FRL's Retail ....
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....bitration agreement, direct commonality of the subject-matter and the agreement between the parties being a composite transaction. The transaction should be of a composite nature where performance of the mother agreement may not be feasible without the aid, execution and performance of the supplementary or ancillary agreements, for achieving the common object, and collectively having bearing on the dispute. Besides all this, the court would have to examine whether a composite reference of such parties would serve the ends of justice. Once this exercise is completed and the court answers the same in the affirmative, the reference of even non- signatory parties would fall within the exception afore-discussed. ... 76. The Court will have to examine such pleas with greater caution and by definite reference to the language of the contract and intention of the parties. In the case of composite transactions and multiple agreements, it may again be possible to invoke such principle in accepting the pleas of non-signatory parties for reference to arbitration. Where the agreements are consequential and in the nature of a follow-up to the principal or mother agreement, the l....
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....ssentially intended to facilitate the fulfilment of a mutually held intent between the parties, where the circumstances indicate that the intent was to bind both signatories and nonsignatories. The effort is to find the true essence of the business arrangement and to unravel from a layered structure of commercial arrangements, an intent to bind someone who is not formally a signatory but has assumed the obligation to be bound by the actions of a signatory. ... 25. Does the requirement, as in Section 7, that an arbitration agreement be in writing exclude the possibility of binding third parties who may not be signatories to an agreement between two contracting entities? The evolving body of academic literature as well as adjudicatory trends indicate that in certain situations, an arbitration agreement between two or more parties may operate to bind other parties as well. ... 27. Gary B. Born in his treatise on International Commercial Arbitration indicates that: The principal legal bases for holding that a non-signatory is bound (and benefited) by an arbitration agreement ... include both purely consensual theories (e.g., agency, assumpti....
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.... contract. 10.4 ..... The 'Group of Companies' doctrine has been invoked by courts and tribunals in arbitrations, where an arbitration agreement is entered into by one of the companies in the group; and the non-signatory affiliate, or sister, or parent concern, is held to be bound by the arbitration agreement, if the facts and circumstances of the case demonstrate that it was the mutual intention of all parties to bind both the signatories and the non- signatory affiliates in the group. The doctrine provides that a non-signatory may be bound by an arbitration agreement where the parent or holding company, or a member of the group of companies is a signatory to the arbitration agreement and the non-signatory entity on the group has been engaged in the negotiation or performance of the commercial contract, or made statements indicating its intention to be bound by the contract, the non-signatory will also be bound and benefitted by the relevant contracts. The circumstances in which the 'Group of Companies' Doctrine could be invoked to bind the non-signatory affiliate of a parent company, or inclusion of a third party to an arbitration, if there is ....
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....bility of the transaction(s) in question, that a non-signatory ought to be included in an arbitration. This requires a consent-based enquiry to ascertain the existence and degree of relational intimacy as well as the presence of an indivisible community of interests to resolve the dispute through a single common modality. 136. The Claimant has prima facie satisfied the established legal criteria that makes FRL a proper party to these proceedings. The facts on record clearly establish the cogent commonality, intimate interconnectivity, and undeniable indivisibility of the contractual arrangements in the Agreements. It is apparent that none of these Agreements would have been entered into without the others. This indeed appears to be an intimate composite transaction between the Claimant and all the Respondents. FRL was actively involved in its negotiation, performance and was its ultimate beneficiary. 137. Mr. Darius Khambata argues that if the Claimant's single integrated contract approach was adopted, the arrangement might likely be illegal, since the Claimant's rights as a foreign investor were limited. He further suggests that the Claimant has misled the CCI on....
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....ter the Agreements were entered into and the control asserted and exerted by Respondent No 3 over all aspects of the entire transaction. He was, in fact, acknowledged to be the "Ultimate Controlling Person" as regards the Future Group; (h) the objectives of the Agreements, i.e. for the Claimant (at some of time when permissible) to become the single largest shareholder of FRL, implemented through the preservation of (i) the Retail Assets of FRL and (ii) the Promoters' shareholding in FRL, free from any encumbrance. Notably, from April to July 2020, representatives from the Future Group have sought additional investments from the Claimant into FRL, prepared and discussed various structure options for the Claimant's investment to benefit FRL, increase the Claimant's stake in FRL and also proposed that the Claimant's nominee would be on the board of directors of FRL. It is clear that rights were created in favour of FCPL (through the FRL SHA), for the benefit of the Claimant (under the FCPL SHA), and all the Respondents were fully aware and actively participated in those negotiations; and (i) similar dispute resolution clauses prevail in all the Agreements. Even the ....
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....rbitral proceedings as a proper party, by anchoring its inclusion to satisfying a consent analysis. After all, once there is consent, the non-signatory ought to be bound since a contractual relationship has already been found. 144. In this matter, criterion [142](a) has been prima facie satisfied by reason of the reasons stated in [139](a) to (d) and (h) above; criterion [142](b) has been prima facie satisfied by reason of the reasons stated in [139](a) to (e) and (h) above; criterion [142](c) has been prima facie satisfied by reason of the reasons stated in [139](a) to (i) above. 145. If it is necessary to satisfy criterion [142](d), this is also prima facie met as it is undoubtedly just that all the relevant affiliated parties, given their proximity and the indivisibility of the Agreements, be included in the same proceedings for reasons of efficiency, promptness, avoidance of conflicting or inconsistent decisions, and, crucially, after considering all the other criteria have been amply satisfied. 146. Last but not least, the Parties have all assented to SIAC arbitral proceedings on identical terms. The Parties' mutual obligations are inexorably linked.....
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....obligation "notwithstanding anything to the contrary contained in" the Agreements. The Promoters acknowledge that they have failed to maintain the Minimum Shareholding free and clear from encumbrances. 226. On the basis of the FCPL SHA and the SSA, the Promoters were prima facie obliged to take steps to preserve the Minimum Shareholding. They baldly submit that they have no other financial resources. Other than this bare assertion, no evidence has been adduced about each of the Promoters' current financial position. 227. The Respondents are contractually obliged not to alienate the Retail Assets in favour of a Restricted Person. It is apparent, from the response(s) of the Majority Respondents, that they do not deny that they have breached their contractual obligations under the Agreements concerning the Retail Assets. 228. The Respondents have not disputed that the ownership of Retail Assets continues to be vested with FRL pending the completion of the Disputed Transaction. FRL has stated that statutory approvals for the completion of the Disputed Transaction will take quite some time. 229. It is plain as a pikestaff that, if the Disputed Transac....
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....ated to the Promoters. As far as FRL was concerned, this was a regular transaction. 234. I do not accept this. First, FRL was aware that the Claimant's consent (and not just FCPL's) was needed for any sale of the Retail Assets, and in particular to a Restricted Person. It had notice of the contents of the 19 December 2019 Letter addressed to it and of the interconnectivity of the Agreements. Second, the members of FRL's Board, and in particular Respondents Nos. 3 and 8 must have known that the Claimant's consent had not been obtained. It does not appear that they recused themselves when the Board Resolution was passed and/or the independent directors were acting on their own motion, uninfluenced by any of the Majority Respondents qua directors and shareholders (representing the Biyanis). Third, the other independent directors must have been aware of this restriction. They were holding office as directors when FRL sent the Disclosure Letters to the Indian Stock Exchanges about the terms of the FRL SHA, the FCPL SHA and the SSA. Before the Effective Date, FRL was also put on notice who were the Restricted Persons vide the 19 December 2020 Letter. Fourth, the Respondents had ....
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....lding that there was no undue delay on the part of the petitioner. The relevant discussion contained in paras 254 to 262 of the interim order is reproduced hereunder: "254. I have set out in some detail the most significant interactions/exchanges between the Claimant and the Respondents that are on record, which show that the Respondents' assertion that the Claimant had given up its rights and or was aware of the nature and substance of the discussions that were being conducted with Reliance/MDA Group are incorrect. The discussions with Reliance were conducted behind its back. It appears that the Respondents have not been entirely candid. They have not disclosed precisely when they began and or settled negotiations with the MDA Group for the sale of FRL's assets. The increasingly frantic nature of the Claimant's communications with Mr. Kishore Biyani and its stark reminders that its consent was needed for any disposal of FRL's Retail Assets indicates that it was not a nonchalant contractual by-stander. 255. The Claimant was at no material point of time informed by the Respondents of the nature, terms and or substance of the Disputed Transaction. During the several....
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....he Samara investment route. It appears to me odd he should communicate this, as it was just 5 days before the Disputed Transaction was announced. Why did he do this? There is no evidence on record to show that the Respondents were actively considering the Samara deal and continuing to engage the Claimant in good faith between July to 29 August 2020. 258. I am therefore prima facie satisfied that the Claimant was at all material times open to working with the Respondents for their common good and long-term benefit. Quite obviously this would have meant formulating a scheme that would concurrently protect its legitimate rights and expectations under the Agreements. It is striking that the Respondents have not asserted that the Claimant broke off the discussions/ engagement to assist them in their recapitalisation efforts and in the amelioration of their financial woes. Perhaps, they could not make such an assertion because the facts on record paint a clear picture of repeated enquiries and reminders from the Claimant as to when and how they could progress the rescue discussions. However, it now appears that the Claimant's forbearance to exercise its legal rights by giving th....
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....ingh's submissions. The horse has not bolted even though the Respondents have opened the stable door. Even assuming that the "horse has bolted", it is apparent that the Respondents are contractually obliged to work with the Claimant to cajole the "unruly horse" to return to its stable." (Emphasis supplied) 23. The Emergency Arbitrator held the balance of convenience to be in favour of the petitioner and further held that the petitioner would suffer irreparable injury if the interim injunction was not granted. The relevant discussion is contained in paras 263 to 275 of the interim order is reproduced hereunder: "iii. The Balance of Convenience 263. FRL has acknowledged that the Indian Stock Exchanges and CCI are now actively considering and reviewing the application for approval of the Disputed Transaction. It is also clear that it is actively engaged in pursuing these applications and is providing data, clarifications and responses to requests to facilitate the completion of the Disputed Transaction. 264. Should FRL receive the approval of the Indian Stock Exchanges, applications will then likely be made to the NCLT to approve the Disputed Transacti....
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.... 267. The Respondents are the primary authors of this unhappy situation. Granted, that the COVID-19 pandemic had caused them unforeseeable difficulties and substantial losses and, without fresh capital, the current situation appears dire. But even in these situations the law expects businesspersons to honour their contractual commitments unless these have been legally vitiated or modified. The Respondents had given unequivocal commitments to collaborate with the Claimant on a number of areas and not to compromise its legitimate interests. They have given no good legal reasons for conducting business behind the Claimant's back and gravely comprising its interests. Economic hardship alone is not a legal ground for disregarding legal obligations. 268. The Respondents also assert that the Claimant's claims ought to sound entirely in damages. They state that there is no explanation why the Claimant's purported losses cannot be compensated in monetary terms other than a bare assertion that that is not the case. In response, the Claimant asserts that it stands to lose its strategic interest in an "irreplaceable and widespread network of retail stores across India, which was bui....
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....tween the Parties broke down and it dawned upon the Claimant that it was being side-lined. The fact that the MDA Group, a strategic competitor, is willing to pay an enormous amount of money even in these troubled times for the purchase of FRL's Retail Assets is in itself a testament to the uniquely strategic value of the relationships and assets at stake. 272. Even after the Majority Respondents' free shares dropped to 0.65% it is apparent that they still have effective control of FRL. Indeed, they have not intimated that they have lost real control of FRL. Respondents No. 3 and 8 appear to be in effective control of the Future Group and its affiliates and they are driving the sale of FRL's assets and the restructuring plans. Despite this, in arguing against injunctive relief, the Majority Respondents now profess that they "have no ability of ...deferring ... any application before any authority... not having made any applications". I do not accept this for the reasons given above. 273. If interim relief is not awarded to the Claimant now it is plain that the Respondents will continue to take steps to complete the Disputed Transaction. They have said as much. The ....
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.... of the Application could have on the Parties and others if it is decided in any number of ways, I have painstakingly reviewed all the submissions and facts to ascertain whether a prima facie case on the merits and on jurisdiction has been established as well as whether interim relief should be granted on the basis of the ascertainable facts. I now set out a summary of the views expressed above. 278. FRL is prima facie a proper party to the FCPL SHA arbitration clause. There is therefore prima facie jurisdiction over it in these proceedings. These proceedings have been properly commenced against all the Respondents. The Claimant has built a strong prima facie case on the merits of the dispute by showing that its rights under the FCPL SHA, the SSA, and the FRL SHA, (insofar as it has been incorporated into the FCPL SHA) have been apparently compromised by the Respondents. 279. The Claimant has an apparent right to be present at any table considering the restructuring of FRL and the Future Group. This is because the core assets of FRL cannot be compromised without its consent. Notwithstanding the Claimant's desire to work with them, the Respondents decided to enter ....
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....L 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 MDA Group; (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-undertakin....
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....d limited veto rights of FCPL. 34. On 22nd August 2019, FCPL, Biyanis and Amazon also entered into a Shareholders Agreement (FCPL-SHA) relating to their rights as shareholders of FCPL. 35. On the same day, FCPL, Biyanis and Amazon entered into a Share Subscription Agreement (SSA) for an investment of INR 1431 Crores by Amazon to acquire 49% of FCPL. 36. Through the FCPL-SHA, the Biyanis undertook that Amazon and the Biyanis would jointly exercise the rights of FCPL in FRL (on the limited three matters), and agreed that they would not decide on these matters without Amazon's consent. This was a fundamental inducement for Amazon. 37. Amazon was also granted a call option to become the single largest shareholder of FRL, when Indian laws permitted Amazon to become the single largest shareholder. 38. FRL was restricted from transferring its assets to a "Restricted Person". The FCPL-SHA also listed the restricted persons and included the MDA Group. 39. The Biyanis and FCPL confirmed and represented to Amazon that the provisions of the FCPL-SHA, including Amazon's rights with respect to FRL, were compliant with, and enforceable under, Indian law. 40. On 22nd August 20....
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....ving any consent for the disputed transaction. Accordingly, FCPL could not have consented to the Disputed Transaction. 50. Aggrieved by the egregious breaches of the agreements, on 05^th October 2020, Amazon initiated arbitration proceedings against Biyanis, FCPL and FRL (Arbitration Proceedings) in terms of Section 25 and Section 27.7(ii) (enabling injunctive reliefs) of the FCPL-SHA before the Singapore International Arbitration Center ("SIAC"). 51. Amazon also invoked Rule 30.1 of the Rules of Arbitration of SIAC, 2016 ("SIAC Rules") and sought appointment of an emergency arbitrator to grant emergency interim relief. On 5th October 2020, SIAC appointed Mr. V.K. Rajah, SC as the Emergency Arbitrator. 52. FRL participated in the proceedings before the Emergency Arbitrator by filing detailed written pleadings and participated in the oral hearing (including a plea that FRL was not a party to the FCPL-SHA and that the EA lacked jurisdiction). After hearing all the parties, the Emergency Arbitrator passed his order on 25th October, 2020 holding that FRL and the Biyanis had prima facie breached the Agreements, and restrained FRL and other respondents from proceeding with the D....
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.... terms of paragraph 10 of Schedule I of the SIAC Rules, the validity of the EA Order is extended during the duration of the Arbitral Proceedings. 60. Given that FRL was making misleading submissions on the basis of certain prima facie observations in the Court Order while rejecting the I.A. 10376 of 2020, seeking restraint on Amazon from making representations to the statutory authorities and falsely claimed that there was acquisition of control over FRL by Amazon; Amazon preferred a limited appeal before the Division Bench of this Hon'ble Court on 11th January 2021. The matter was heard on 13th January 2021, and while issuing notice to the respondents, the Division Bench fixed the next date of hearing on 12th February 2021. 61. On 20th January 2021, the Indian Stock Exchanges granted their conditional no-objection to the Disputed Transaction. The aforesaid nonobjection is, by its own terms, subject to the outcome of the arbitral proceedings. 62. On 25th January 2021, Amazon served an advance copy of the present Petition to FRL. FRL made a disclosure relating to the same on the same day. 63. With a view to pre-empt any action in the present Petition and to effectively f....
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....tly violated the Emergency Arbitrator order with impunity. 71. The respondent raised an objection to the jurisdiction before the Emergency Arbitrator. The Emergency Arbitrator analysed the relevant provisions including Section 17 of the Arbitration and Conciliation Act. The Emergency Arbitrator noted that the Rules of Delhi International Arbitration Centre, 2018 provide for Emergency Arbitration and Rule 14.8 provides that the order of an Emergency Arbitrator shall be enforceable in the manner provided in Arbitration and Conciliation Act. The Emergency Arbitrator concluded that the Emergency Arbitrator is an Arbitral Tribunal for all intents and purposes. In paras 104 to 106, it is noted that the Emergency Arbitrators are recognized in the Indian Arbitration framework. 72. Despite claiming that the EA Order is a nullity and not binding on it, on 28th January 2021, FRL formally approached the Arbitral Tribunal to vacate the EA Order. IV. Submissions of respondents 73. The Petition is ex-facie not maintainable. Section 17 of the Arbitration and Conciliation Act, 1996, after its Amendment in 2015, provides that an order issued by an Arbitral Tribunal shall be enforceable a....
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....ursuant to the procedures set forth in Schedule 1." Alternatively, Rule 30.3 provides the option to the parties to approach "a judicial authority prior to the constitution of the Tribunal". 79. Rule 1.3 of the SIAC Rules defines an "Emergency Arbitrator" as an arbitrator appointed in accordance with paragraph 3 of Schedule 1 whereas it defines "Tribunal" to include a sole arbitrator or all the arbitrators where more than one arbitrator are appointed. Further, the definition of "Award" under Rule 1.3 also draws the same distinction. It is defined to include "a partial, interim or final award and an award of an Emergency Arbitrator." Schedule 1 of the SIAC Rules also makes it explicit that an Emergency Arbitrator is not an 'arbitral tribunal'. 80. Rule 1 of Schedule 1 provides that a party seeking emergency interim reliefs may, concurrent with or following the filing of a Notice of Arbitration but prior to the constitution of the Tribunal, file an application for emergency interim relief with the Registrar. 81. Rule 6 of Schedule 1 provides that "An Emergency Arbitrator may not act as an arbitrator in any future arbitration relating to the dispute, unless otherwise agreed by....
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....national Pvt Ltd v Educomp Professional Education Ltd & Ors - 2016 SCC Online Del 5521 [case under Part II of the Act] this Court observed (at para 104) that an emergency award "...cannot be enforced under the Act and the only method for enforcing the same would be for the petitioner to file a suit." It was clarified (at para 105) that alternatively parties may independently approach the Court under Section 9 of the Act not for enforcing the order of the Emergency Arbitrator but instead for the Court to "independently apply its mind and grant interim relief in the cases where it is warranted." Thus, Raffles (supra) holds that an order of an Emergency Arbitrator is not valid under Indian law. 87. On 20th November, 2020, the Competition Commission of India granted its approval. On 20th January, 2021, the approvals were granted by SEBI and the Stock Exchanges respectively without any adverse observation, as the same is in the interest of all stakeholders (including small investors, creditors, scheduled banks and other banks) who have lent funds to various Future Group Companies, employees and vendors attached to these companies and provide overall solution for benefit of all the st....
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....pproving the transaction with Reliance is valid and that FRL is within its legal rights to act upon the Resolution. A contrary interim order by an Emergency Arbitrator would necessarily stand superseded, for any relief granted pursuant to that interim order would be contrary to a later order passed by this Court in Future Retail Ltd. v. Amazon.Com Investment Holdings LLC (supra) to which Amazon was a party. The attempt by Amazon to enforce the EA Order, despite it being overridden by the Judgment, is an abuse of the process. 91. The order of the Emergency Arbitrator is a nullity insofar as FRL is concerned. The finding of the Emergency Arbitrator that he had jurisdiction over FRL is not conclusive because the Emergency Arbitrator has misapplied the law and the contracts to confer jurisdiction upon himself. 92. There is no arbitration agreement in writing between FRL and Amazon and the Emergency Arbitrator has misapplied the concept of 'group companies' to hold that the two SHAs have to be read together. The agreements cannot be read together and if it is so done, it would result in violation of the Foreign Exchange Management Act, 1999. 93. The principle of 'group companie....
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....itted facts are as follows: (i) FRL has agitated its case with respect to the Emergency Arbitrator having no authority, before the Emergency Arbitrator himself, which was rejected. (ii) FRL has not appealed against the EA Order till date. (iii) On the evening of 28th January 2021, i.e. shortly after the hearing on the Petition concluded, FRL stated its intent before the Arbitral Tribunal to file an application for vacation of the EA Order; hence, admitting that the EA Order is binding on FRL. (iv) The only challenge to the EA Order, if at all, was a collateral challenge before the learned Single Judge of this Court in CS (COMM.) 493/2020 on the misconceived ground that the Emergency Arbitrator was 'coram non judice' and outside the framework of the Arbitration and Conciliation Act, 1996. This challenge, which was earlier rejected by the Emergency Arbitrator himself, was also expressly rejected by the learned Single Judge, who held that the EA Order was valid under the Arbitration and Conciliation Act, 1996 and therefore, not a nullity. (v) It is trite law that while enforcing an order under Section 17(2) of the Arbitration and Conciliati....
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.... Single Judge observed that "it cannot be held that the provisions of Emergency Arbitration under the SIAC rules are, per se, contrary to any mandatory provisions of the Arbitration and Conciliation Act, 1996. Hence the Emergency Arbitrator prima facie is not a coram non judice and the consequential EA order not invalid on this count." 105. FRL not having challenged the EA Order in accordance with law, it is not open to FRL to disregard the order as mere wastepaper. In a proceeding under Section 17(2) of the Arbitration and Conciliation Act, 1996, an interim measure ordered by the Emergency Arbitrator not having been appealed in accordance with law, is effective and cannot be challenged. 106. FRL's self-serving proclamation that the EA Order is a nullity is a dangerous proposition as it undermines the credibility of the arbitration process and the Indian courts' ability to enforce valid orders passed during the arbitration proceedings. 107. The EA Order is not a nullity/ void and the Delhi High Court Order does not supersede the same. FRL is a proper party to the Arbitration Proceedings 108. FRL now alleges that the EA Order is nullity insofar as FRL is concerned as ....
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....work that they all unequivocally consented to. 117. The Emergency Arbitrator has considered the application of the "Group of Companies" doctrine to the facts of the disputes before the Emergency Arbitrator, including landmark decisions of the Supreme Court in Chloro Controls India Pvt. Ltd. (supra), Cheran Properties (supra) and MTNL v. Canara Bank (supra). The Emergency Arbitrator has held that under Section 2(1)(h) of the Arbitration and Conciliation Act, 1996, a 'party' is defined as a 'party' to the arbitration agreement' and, crucially, not as a 'signatory' to the arbitration agreement. Therefore, FRL is a party to the arbitration proceedings. 118. The close inter-connected nature of the Agreements, simultaneous negotiations and discussions of the Agreements by a single/ common legal team, FRL's awareness that the protective, special and material rights were being created for Amazon's benefit and FRL being a direct beneficiary of monies invested by Amazon were some of the key considerations for holding that FRL is a proper party to the Arbitration Proceedings applying the doctrine of 'group of companies'. 119. In view of the above, having elected to raise this jurisdi....
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....bligations. In particular, FRL's argument that Amazon's investment in FCPL and the exercise of such rights under the FCPL-SHA to prevent the sale of FRL's Retail Assets to a Restricted Person violates the law, cannot be permitted. This is especially so since this argument has been considered by the EA and expressly rejected. 127. The Emergency Arbitrator held that "protective rights do not amount to control of FRL. Rather, they oblige FRL not to act in a manner that would be inimical to the Claimant's interest as its long time stakeholder". 128. In the absence of filing an appeal, it is impermissible to assail the EA Order on merits. The Doomsday Argument 129. Last but not least, FRL argues that if the Scheme falls through, it is inevitable that FRL will go into liquidation. This is an argument of desperation wholly alien to an enforcement proceeding and in any event rejected on the merits by the Emergency Arbitrator. 130. Amazon was always ready, willing and able to assist with helping FRL in a manner consistent with law through its distress and in fact did engage to find a commercial solution to the problems FRL was experiencing. It did so by way of finding partner....
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....g with the Respondents to rejuvenate it. 132. It may be noted regretfully that the respondent filed an application under Sections 230-232 of the Companies Act, 2013 for seeking approval of the NCLT after having received a copy of the present petition on 25th January 2021. This attempt to over-reach the Court must be discountenanced. VII. Relevant Provisions Arbitration and Conciliation Act, 1996 Section 2 - Definitions (1) In this Part, unless the context otherwise requires,- (a) "arbitration" means any arbitration whether or not administered by permanent arbitral institution; (b) "arbitration agreement" means an agreement referred to in section 7; (c) "arbitral award" includes an interim award; xxx xxx xxx (d) "arbitral tribunal" means a sole arbitrator or a panel of arbitrators; xxx xxx xxx (h) "party" means a party to an arbitration agreement. xxx xxx xxx (6) Where this Part, except section 28, leaves the parties free to determine a certain issue, that freedom shall include the right of the parties to authorise any person including an institution....
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.... the possession of any party, or authorising any samples to be taken, or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence; (d) interim injunction or the appointment of a receiver; (e) such other interim measure of protection as may appear to the arbitral tribunal to be just and convenient, and the arbitral tribunal shall have the same power for making orders, as the court has for the purpose of, and in relation to, any proceedings before it. (2) Subject to any orders passed in an appeal under Section 37, any order issued by the arbitral tribunal under this section shall be deemed to be an order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were an order of the Court. Section 19 - Determination of rules of procedure (1) The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872). (2) Subject to this Part, the parties are free to agree on the procedure to be followed by the arbit....
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....that the judgment-debtor, with the object or effect of obstructing or delaying the execution of the decree,- (i) is likely to abscond or leave the local limits of the jurisdiction of the Court, or (ii) has, after the institution of the suit in which the decree was passed, dishonestly transferred, concealed, or removed any part of his property, or committed any other act of bad faith in relation to his property, or (b) that the judgment-debtor has, or has had since the date of the decree, the means to pay the amount of the decree or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same, or (c) that the decree is for a sum for which the judgment debtor was bound in a fiduciary capacity to account. Explanation.-In the calculation of the means of the judgment debtor for the purposes of clause (b), there shall be left out of account any property which, by or under any law or custom having the force of law for the time being in force, is exempt from attachment in execution of the decree. Order XXI Rule 32 - Decree for specific performance for restitution of conjugal rights, or for a....
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.... XXXIX Rule 2-A - Consequence of disobedience or breach of injunction (1) In the case of disobedience of any injunction granted or other order made under Rule 1 or Rule 2 or breach of any of the terms on which the injunction was granted or the order made, of the Court granting the injunction or making the order, or any Court to which the suit or proceeding is transferred, may order the property of the person guilty of such disobedience or breach to be attached, and may also order such person to be detained in the civil prison for a term not exceeding three months, unless in the meantime the Court directs his release. (2) No attachment made under this rule shall remain in force for more than one year, at the end of which time, if the disobedience or breach continues, the property attached may be sold and out of the proceeds, the Court may award such compensation as it thinks fit to the injured party and shall pay the balance, if any, to the party entitled thereto. Singapore International Arbitration Centre Rules, 2016 Rule 1.3 "Award" includes a partial, interim or final award and an award of an Emergency Arbitrator xxx xxx&nb....
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....n an Award on the merits. 28.5 A party may rely on a claim or defence for the purpose of a set-off to the extent permitted by these Rules and the applicable law. Rule 30: Interim and Emergency Relief 30.1 The Tribunal may, at the request of a party, issue an order or an Award granting an injunction or any other interim relief it deems appropriate. The Tribunal may order the party requesting interim relief to provide appropriate security in connection with the relief sought. 30.2 A party that wishes to seek emergency interim relief prior to the constitution of the Tribunal may apply for such relief pursuant to the procedures set forth in Schedule 1. 30.3 A request for interim relief made by a party to a judicial authority prior to the constitution of the Tribunal, or in exceptional circumstances thereafter, is not incompatible with these Rules. SCHEDULE 1 EMERGENCY ARBITRATOR 1. A party that wishes to seek emergency interim relief may, concurrent with or following the filing of a Notice of Arbitration but prior to the constitution of the Tribunal, file an application for emergency interim relief with the Registrar. The p....
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....s appointment, establish a schedule for consideration of the application for emergency interim relief. Such schedule shall provide a reasonable opportunity for the parties to be heard, but may provide for proceedings by telephone or video conference or on written submissions as alternatives to a hearing in person. The Emergency Arbitrator shall have the powers vested in the Tribunal pursuant to these Rules, including the authority to rule on his own jurisdiction, without prejudice to the Tribunal's determination. 8. The Emergency Arbitrator shall have the power to order or award any interim relief that he deems necessary, including preliminary orders that may be made pending any hearing, telephone or video conference or written submissions by the parties. The Emergency Arbitrator shall give summary reasons for his decision in writing. The Emergency Arbitrator may modify or vacate the preliminary order, the interim order or Award for good cause. 9. The Emergency Arbitrator shall make his interim order or Award within 14 days from the date of his appointment unless, in exceptional circumstances, the Registrar extends the time. No interim order or Award shall be made....
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....rement of urgent interim or conservatory measures that cannot await the formation of the Arbitration Tribunal, it may make an application to the Secretariat addressed to the Coordinator, with a simultaneous copy thereof to the other parties to the arbitration agreement for such measures. 14.2 The party making such an application shall: (a) include a statement briefly describing the nature and circumstances of the relief sought and specific reasons why such relief is required on an emergency basis and the reasons why the party is entitled to such relief; (b) pay the relevant application fee for the appointment of the Emergency Arbitrator, and (c) file proof of service of such application upon the opposite parties. 14.3 The Emergency Arbitrator's fee shall be as prescribed in The Delhi International Arbitration Centre (Administrative Costs and Arbitrators' Fees) Rules and the party invoking the provision of Emergency Arbitrator shall deposit such fees along with the Application. 14.4 The Secretariat, with the consent of the Chairperson or the Sub-Committee appointed by the Chairperson shall appoint the Emergency Arbitrator within ....
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....d the order beyond the period of two months. 14.13 Any order of the Emergency Arbitrator may be confirmed, varied, discharged or revoked, in whole or in part, by order or award made by the Arbitral Tribunal upon application by any party or upon its own initiative. VIII. Discussion and Findings Legal status of Emergency Arbitrator 133. The Emergency Arbitrator is a sole arbitrator appointed by the Arbitration Institution to consider the Emergency Interim Relief Application in cases where the parties have agreed to arbitrate according to the Rules of that Arbitration Institution which contain provisions relating to Emergency Arbitration. The status of the Emergency Arbitrator is based on party autonomy as the law gives complete freedom to the parties to choose an arbitrator or an Arbitral Institution. The powers of the Emergency Arbitrator are the same of those of a Arbitral Tribunal to decide the interim measures. The order/award of the Emergency Arbitrator is binding on all the parties. However, they do not bind the subsequently constituted Arbitral Tribunal and the Arbitral Tribunal is empowered to reconsider, modify, terminate or annul the order/award of the Eme....
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.... an order or of an award of an Emergency Arbitrator shall be enforceable in the manner as provided in the Act. The Rules of Mumbai Centre for International Arbitration (MCIA) and Madras High Court Arbitration Centre (MHCAC) also contain similar provisions for appointment of an Emergency Arbitrator. 138. The Emergency Arbitration is a very effective and expeditious mechanism to deal with the Emergency Interim Relief Application and has added a new dimension to the protection of the rights of the parties. The advantage of the Emergency Arbitration mechanism is that a litigant is able to get the justice within 15 days, which is not possible in Courts. However, if the order of the Emergency Arbitrator is not enforced, it would make the entire mechanism of Emergency Arbitration redundant. 139. In the present case, the arbitration agreement is contained in Clause 25.2.1 of the Shareholder's Agreement dated 22nd August, 2019 according to which, all disputes between the parties have to be referred to and resolved by arbitration in accordance with the Rules of Singapore International Arbitration Centre (SIAC). The seat of arbitration is New Delhi and the Courts at New Delhi have exclu....
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....y Arbitrator. 145. Under Section 17(1) of the Arbitration and Conciliation Act, the Arbitral Tribunal has the same powers to make interim order, as the Court has, and Section 17(2) makes such interim order enforceable in the same manner as if it was an order of the Court. The Interim Order is appealable under Section 37 of the Arbitration and Conciliation Act. 146. The current legal framework is sufficient to recognize the Emergency Arbitration and there is no necessity for an amendment in this regard. In that view of the matter, reference to 246th Law Commission Report does not help the respondents. 147. The respondents have referred to Rules 30, 30.1, 30.2, 30.3 and Schedule I Rules 1, 6 and 10 of SIAC Rules to contend that the Emergency Arbitrator is not an Arbitrator. However, in view of the clear language of Rule 1.3 of SIAC Rules, which defines the Emergency Arbitrator as an Arbitrator, there is no doubt with respect to the legal status of an Emergency Arbitrator that he is an arbitrator for all intents and purposes. 148. According to the respondents, Rules of DIAC, MCIA and MHCAC are contrary to the provisions of the Arbitration and Conciliation Act. There is no ....
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.... the challenge holding that a party having chosen to go to the Emergency Arbitrator and having failed to its in endeavour to obtain interim relief, cannot seek the same relief in Section 9 proceedings. The Division Bench distinguished Raffles Design (supra). The Division Bench upheld that the petition under Section 9 of the Arbitration and Conciliation Act was not maintainable. Thus, the Division Bench clearly recognized the legal status of the Emergency Arbitrator as an Arbitrator under the Arbitration and Conciliation Act. Whether Doctrine of Group of Companies applies only to proceedings under Section 8 of the Arbitration and Conciliation Act, as alleged by respondent No.2 152. The law relating to the Group of Companies doctrine is well settled by the Supreme Court in Chloro Controls India Private Limited v. Sever N Trent Water Purification Inc., (2013) 1 SCC 641, Cheran Properties Limited v. Kasturi and Sons Limited, (2018) 16 SCC 413 and MTNL vs. Canara Bank, (2020) 12 SCC 767. The Group of Companies doctrine binds the non-signatory entity where the multiple agreements reflect a clear intention of the parties to bind both the signatory and non-signatory entities within the ....
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....be said to include the signatory as well as the non-signatory parties. Paras 71 and 72 of the judgment are reproduced hereunder: "71. Though the scope of an arbitration agreement is limited to the parties who entered into it and those claiming under or through them, the courts under the English law have, in certain cases, also applied the "group of companies doctrine". This doctrine has developed in the international context, whereby an arbitration agreement entered into by a company, being one within a group of companies, can bind its non-signatory affiliates or sister or parent concerns, if the circumstances demonstrate that the mutual intention of all the parties was to bind both the signatories and the non-signatory affiliates. This theory has been applied in a number of arbitrations so as to justify a tribunal taking jurisdiction over a party who is not a signatory to the contract containing the arbitration agreement. 72. This evolves the principle that a non-signatory party could be subjected to arbitration provided these transactions were with group of companies and there was a clear intention of the parties to bind both, the signatory as well as the non-si....
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....tion of the parties. In the case of composite transactions and multiple agreements, it may again be possible to invoke such principle in accepting the pleas of non-signatory parties for reference to arbitration. Where the agreements are consequential and in the nature of a follow-up to the principal or mother agreement, the latter containing the arbitration agreement and such agreements being so intrinsically intermingled or interdependent that it is their composite performance which shall discharge the parties of their respective mutual obligations and performances, this would be a sufficient indicator of intent of the parties to refer signatory as well as non-signatory parties to arbitration. The principle of "composite performance" would have to be gathered from the conjoint reading of the principal and supplementary agreements on the one hand and the explicit intention of the parties and the attendant circumstances on the other. xxx xxx xxx 78. In India, the law has been construed more liberally, towards accepting incorporation by reference. .... The Court observed that while ascertaining the intention of the parties, attempt should be made to give....
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....the court approaches the matter by attributing to the transactions a meaning consistent with the business sense which was intended to be ascribed to them. Therefore, factors such as the relationship of a non-signatory to a party which is a signatory to the agreement, the commonality of subject-matter and the composite nature of the transaction weigh in the balance. The group of companies doctrine is essentially intended to facilitate the fulfilment of a mutually held intent between the parties, where the circumstances indicate that the intent was to bind both signatories and non-signatories. The effort is to find the true essence of the business arrangement and to unravel from a layered structure of commercial arrangements, an intent to bind someone who is not formally a signatory but has assumed the obligation to be bound by the actions of a signatory. xxx xxx xxx 25. Does the requirement, as in Section 7, that an arbitration agreement be in writing exclude the possibility of binding third parties who may not be signatories to an agreement between two contracting entities? The evolving body of academic literature as well as adjudicatory trends indicat....
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....w such a defence to prevail would be to cast the mutual intent of the parties to the winds and to put a premium on dishonesty. Relevant portion of para 35 is reproduced hereunder: "35...Having regard to this factual context, the defence of the appellant against the enforcement of the award cannot be accepted. To allow such a defence to prevail would be to cast the mutual intent of the parties to the winds and to put a premium on dishonesty" (Emphasis supplied) 160. The Supreme Court further noted that the arbitral award has the character of a decree of a Civil Court and is capable of being enforced as if it was a decree. The Supreme Court further noted that the arbitral award had attained finality and can be enforced in accordance with the provisions of the Code of Civil Procedure in the same manner as if it were a decree of the Court. Relevant portions of para 36 and 38 are reproduced hereunder: "36. ... The arbitral award has the character of a decree of a civil court under Section 36 and is capable of being enforced as if it were a decree. ..." xxx xxx xxx "38. In the present case, the arbitral award required the shares to be....
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....e to join a non-signatory member of the group, if they are satisfied that the non-signatory company was by reference to the common intention of the parties, a necessary party to the contract. 10.4. The doctrine of "group of companies" had its origins in the 1970s from French arbitration practice. The "group of companies" doctrine indicates the implied consent to an agreement to arbitrate, in the context of modern multi-party business transactions. It was first propounded in Dow Chemical v. Isover-Saint-Gobain, 1984 Rev Arb 137, where the Arbitral Tribunal held that: "... the arbitration clause expressly accepted by certain of the companies of the group should bind the other companies which, by virtue of their role in the conclusion, performance, or termination of the contracts containing said clauses, and in accordance with the mutual intention of all parties to the proceedings, appear to have been veritable parties to these contracts or to have been principally concerned by them and the disputes to which they may give rise." 10.5. The group of companies doctrine has been invoked by courts and tribunals in arbitrations, where an arbitration agreement is e....
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....on under Part I of the 1996 Act. xxx xxx xxx 10.11. It will be a futile effort to decide the disputes only between MTNL and Canara Bank, in the absence of CANFINA, since undisputedly, the original transaction emanated from a transaction between MTNL and CANFINA - the original purchaser of the bonds. The disputes arose on the cancellation of the bonds by MTNL on the ground that the entire consideration was not paid. There is a clear and direct nexus between the issuance of the bonds, its subsequent transfer by CANFINA to Canara Bank, and the cancellation by MTNL, which has led to disputes between the three parties. Therefore, CANFINA is undoubtedly a necessary and proper party to the arbitration proceedings. 10.12. Given the tripartite nature of the transaction, there can be a final resolution of the disputes, only if all three parties are joined in the arbitration proceedings, to finally resolve the disputes which have been pending for over 26 years now... xxx xxx xxx 11. In view of the aforesaid discussion, the present appeals are partly allowed. We invoke the group of companies doctrine, to join Respondent 2 CAN....
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.... by making part payment of the same; (d) at the time of entering into two MoUs with Doosan India, GMR Energy had acquired a 100% stake in GCEL. The Madras High Court in SEI Adhavan Power Private Limited and Ors. v Jinneng Clean Energy Technology Limited and Ors., 2018 (4) CTC 464 also followed the decision in Chloro Controls to join a non-signatory as a party to arbitration. The court relied on factors such as shared office, e-mails, agent relationship, etc, to conclude that the signatory and non-signatory were alter egos of one another and therefore the non-signatory could be made party to the arbitration. The group of companies doctrine has, however, acquired particular relevance in international arbitration, to extend the arbitration agreements signed by one or more companies in a group, to non-signatory members of the same group. The doctrine was introduced into arbitration in the beginning of the 1980s in Dow Chemical v Isover-Saint-Gobain ICC Award No. 4131 of 1982. In this case, two subsidiaries of the Dow Chemical company group entered into two separate distribution agreements with Boussois-Isolation, whose rights and obligations were subsequently assigned....
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....natory companies of the Dow Chemical group were sharing the use of the same trademarks. Additionally, it is required that the non-signatory company has had an active role in the negotiations, the performance, or the termination of the contract, which contains the arbitration agreement. In Contractor v Yugoslavian Enterprise, ICC Award No. 6000 of 1988 the tribunal assumed jurisdiction over the non-signatory affiliate of the signatory company, as it was satisfied that the two affiliate companies had close business and corporate links because they were in all respects substantially identical entities, although separate companies under the US law as both companies were owned by the same shareholders in equal proportion. Furthermore, the subject-matter and business place of their activities were the same, and the persons had been acting as representatives for both of them. xxx xxx xxx Group of Companies Doctrine in Domestic Arbitrations The decision of the Supreme Court in Chloro Controls was in relation to an international commercial arbitration. In Ameet Lalchand Shah & Ors. v. Rishabh Enterprises and Anr. AIR 2018 SC 3041 the Supreme Court answ....
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.... Ors. 2018 (2) Arb LR 488 (Delhi)) and other concepts of contractual rights. The 'group of companies' doctrine has been applied where an arbitration agreement is entered into by a company being a constituent of a group of corporate entities, to bind a non-signatory affiliate Chloro Controls India (P) Ltd. v Severn Trent Water Purification Inc. (2013) 1 SCC 641 in certain circumstances. For instance, it is invoked in a case where there is a composite transaction, and a clear intention of the parties to bind both the signatory and non-signatory parties. xxx xxx xxx The doctrine implies that a non-signatory party could be subjected to arbitration provided the transactions were with a group of companies, and there was a clear intention of the parties to bind both, the signatory as well as the non-signatory parties. In other words, 'intention of the parties' is a very significant feature which must be established before the scope of arbitration can be said to include the signatory as well as the non-signatory parties. xxx xxx xxx In cases of composite transactions and multiple agreements, the intention of the parties t....
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....s, these agreements are inter-related and are in pursuance of a single commercial project. The disputes between all the parties, under the four agreements, were referred to a common arbitration. The Courts have held that where there is a tight group structure with strong organizational and financial links, so as to constitute the corporate entities into a single economic unit, or a single economic reality, the group of companies doctrine could be invoked. In MTNL v Canara Bank, AIR 2019 SC 4449 the court invoked the group of companies doctrine, to join a wholly owned subsidiary to the arbitration proceedings. This doctrine would apply in particular when the funds of one company are used to financially support or restructure the other members of the group." xxx xxx xxx Non-Signatories/Third Parties to an Arbitration (At pages 1362 to 1366) The amendments to Section 17 of the 1996 Act has conferred the power upon arbitral tribunals to grant interim reliefs like preservation, interim custody or sale of goods which are the subject-matter of the arbitration agreement, etc. The amended Section 17(1) provides that the arbitral tribunal shall....
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....oup could rely on an arbitration clause in contracts between Isover St. Gobain and two Dow Chemical group companies. The tribunal held that a group of companies constituted one and the same economic reality (une realite economique unique) which the tribunal should take into account when ruling on its jurisdiction. Courts have relied on the doctrine to hold that an arbitration agreement is enforceable against third parties who are involved in the execution or performance of the contract, or when the contract and conduct of these parties make it possible to presume that they were aware of the existence and scope of the arbitration clause. The application of this doctrine is factdependent, and the conduct, involvement of the non-signatory parties is of crucial significance. xxx xxx xxx In cases of composite transactions and multiple agreements, the intention of the parties to refer non-signatories to arbitration can be discerned if the agreements are so interlinked that only their composite performance can discharge the mutual obligations of the parties. xxx xxx xxx In a case where several inter-connected agreements ....
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.... non-signatory party can be subjected to arbitration where there was a clear intention of the parties to bind both, the signatory as well as the non-signatory parties who are part of Group of Companies. In other words, "intention of the parties" is a very significant feature which must be established before the scope of arbitration can be said to include the signatory as well as the non-signatory parties. 163.6 Direct relationship to the party signatory to the arbitration agreement, direct commonality of the subject-matter and the agreement between the parties being a composite transaction. The transaction should be of a composite nature where performance of the mother agreement may not be feasible without aid, execution and performance of the supplementary or ancillary agreements, for achieving the common object and collectively having bearing on the dispute. Besides all this, the Court has to examine whether a composite reference of such parties would serve the ends of justice. 163.7 Where the agreements are consequential and in the nature of a follow-up to the principal or mother agreement, the latter containing the arbitration agreement and such agreements being so intrin....
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....trator noted in para 118 of the interim order that a "party" to an arbitration agreement defined in Section 2(1)(h) of the Arbitration and Conciliation Act need not be a signatory to the arbitration agreement. The Emergency Arbitrator referred to and relied upon the aforesaid three Supreme Court judgments, namely, Chloro Controls (supra), Cheran Properties Ltd. (supra) and MTNL vs. Canara Bank (supra). 165. In para 136, the Emergency Arbitrator recorded the prima facie satisfaction that FRL is a proper party as the facts on record establish a cogent commonality, intimate interconnectivity and undeniable indivisibility. Para 136 of the interim order is reproduced hereunder: "136. The Claimant has prima facie satisfied the established legal criteria that makes FRL a proper party to these proceedings. The facts on record clearly establish the cogent commonality, intimate interconnectivity, and undeniable indivisibility of the contractual arrangements in the Agreements. It is apparent that none of these Agreements would have been entered into without the others. This indeed appears to be an intimate composite transaction between the Claimant and all the Respondents. FRL was....
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.... July 2020, representatives from the Future Group have sought additional investments from the Claimant into FRL, prepared and discussed various structure options for the Claimant's investment to benefit FRL, increase the Claimant's stake in FRL, and also proposed that the Claimant's nominee would be on the board of directors of FRL. It is clear that rights were created in favour of FCPL (through the FRL SHA), for the benefit of the Claimant (under the FCPL SHA), and all the Respondents were fully aware and actively participated in those negotiations; and (i) similar dispute resolution clauses prevail in all the Agreements. Even the FRL SHA (which is essentially a domestic agreement) has an SIAC dispute resolution clause." 167. Applying the well settled law relating to Group of Companies doctrine laid down by the Supreme Court to the present case, this Court is satisfied that the Group of Companies doctrine is applicable to the present case and respondent No.2 is a proper party to the arbitration proceedings for the reasons given by the learned Emergency Arbitrator and more particularly the following:- 167.1 Signatory and non-signatory company (FRL) belong to the same....
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.... (supra) and MTNL (supra), before the Emergency Arbitrator. Reference be made to para 119 of the interim order in which the Emergency Arbitrator recorded that "In the course of the oral submissions FRL's Counsel, Mr. Salve, did not dispute the correctness of these legal propositions." However, respondent No.2 has set up a new plea before this Court that that the Group of Companies doctrine applies only to proceedings under Section 8 of the Arbitration and Conciliation Act, which is contrary to the law laid down by the Supreme Court. This Court is of the view that the law laid down by the Supreme Court is binding on all the parties and setting up a plea contrary to the well settled law declared by the Supreme Court is a very serious matter and is dealt with in the latter part of this judgment. Whether the Interim Order is Nullity 170. According to the respondents, the interim order is Nullity. However, the respondents do not dispute that the three agreements in question are legal and valid. The basic feature of a valid agreement is that it is enforceable by law. A valid contract is "An agreement enforceable by law" whereas "An agreement not enforceable by law" is void (Section 2(....
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....regulatory scrutiny. Second, the Agreements do not confer, and the claimant has not attempted to assert control of or over FRI. 138. The documents that the Claimant filed with the CCI have to be read in their entirety, rather than cherry picked. A close reading does not suggest that there were misstatements made by the Claimant. It did not conceal its protective rights. Such protective rights do not amount to control of FRL. Rather, they oblige FRL not to act in a manner that would be inimical to the Claimant's interests as its long-term stakeholder." (Emphasis supplied) 174. The Emergency Arbitrator held the investment to be in accordance with law as the control remains with FRL despite the protective rights. This Court agrees with the Emergency Arbitrator that the protective rights do not amount to control of the petitioner over FRL and do not violate any law. 175. The respondents have strongly relied upon the observations made in order dated 21st December, 2020 in Future Retail Ltd. v. Amazon.Com Investment Holdings LLC, 2020 SCC Online Del 1636. This Court notes that the Court has made certain prima facie observations while rejecting I.A.10376/2020 though the interim o....
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.... to the facts nor responded to the factual submissions of the petitioner. The hearing continued on 01st February, 2021 and 02nd February, 2021. On 02nd February, 2021, both the parties concluded their oral submissions whereupon this Court reserved the order. During the course of hearing, it was put to the respondents whether they were willing to withhold further action till the pronouncement of the order which was declined by the respondents whereupon this Court granted interim protection to the petitioner till the pronouncement of this detailed order. 180. On 29th January, 2021, this Court had directed the respondents to place on record their case on facts. This Court further directed the respondents to respond to the plaintiffs submissions on facts. However, the respondents neither disclosed their case on facts nor responded to the statement of facts made by the petitioner despite being directed by this Court. The respondents have not given any justification for not disclosing their stand on facts despite being directed to do so. The purpose of calling for the statement of facts was to satisfy whether the interim order is not against the most basic notions of Morality or Justi....
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.... accepting the correctness of the Claimant's factual assertions and the jurisdiction of this Tribunal apropos FRL. He, nevertheless, candidly acknowledged: And we know today that the promoters have a serious case to answer on breach, and they are saying there was a term where they would have had to help, they have not helped us, we are not in breach...... I am arguing this on the footing that the promoters have breached some arrangement with Amazon." 184. The respondents have taken Rs. 1431 crore from the petitioner solely on the basis of the rights provided by FRL to FCPL that they would not transfer their retail assets without the prior consent of the petitioner and never to a Restrict Person. Admittedly, the respondents have breached the agreements. However, there is no remorse. The intention of the respondents do not appear to be honest. The whole thrust of the respondents before this Court is that the petitioner is a trillion dollar company and Rs. 1430 crore invested by them in the present case is peanuts for them and they should forget about this money as it is worth zero today. To quote learned senior counsel for the respondent No.2 "...What happens to his 1430 ....
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....making a false claim in a Court an offence punishable imprisonment up to two years and fine. Section 209 is a very important provision to curb false claims but has been rarely invoked in our country. The leading case on Section 209 IPC is Bachoo Mohan Singh v. Public Prosecutor, (2010) SGCA 25 by Singapore Supreme Court in which Three Judges Bench of Singapore Supreme Court interpreted Section 209 IPC. The majority judgment authored by V.K. Rajah, J., as he then was, is reproduced in para 9 of the H.S. Bedi (Supra). This Court accepted the principles laid down by the Singapore Supreme Court. This Court has laid down the guidelines relating to Section 209 IPC. 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 Propertie....
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....urther 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. 198. List for reporting compliance as a part-heard matter on 28th April, 2021. ============= Document 1 FUTURE COUPONS PRIVATE LIMITED Το Secretarial Department Copy to: Mr. Virendra Samani Future Retail Limited Knowledge House, Shyam Nagar, Off Jogeshwari -Vikhroli Link Road, Jogeshwari (East), Mumbai - 400 060 Email: [email protected]: virendra [email protected] Copy to: Compliance Officer Copy to: Mr. Rajesh Pathak Future Corporate Resources Private Limited Knowledge House, Shyam Nagar, Off Jogeshwari-Vikhroli Link Road, Jogeshwari (East), Mumbai - 400 060 Email: [email protected] Da....