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TMI Blog2021 (3) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, the petitioner s investment does not violate any law. All the objections raised by the respondents are hereby rejected with cost of ₹ 20,00,000/- to be deposited by the respondents with the Prime Minister Relief Fund for being used for providing COVID vaccination to the Below Poverty Line (BPL) category - senior citizens of Delhi. The cost be deposited within a period of two weeks and the receipt be placed on record within one week of the deposit. The respondents have deliberately and willfully violated the interim order dated 25th October, 2020 and are liable for the consequences enumerated in Order XXXIX Rule 2A of the Code of Civil Procedure - In exercise of power under Order XXXIX Rule 2A(1) of the Code of Civil Procedure, the assets of respondents No.1 to 13 are hereby attached. Respondents No.1 to 13 are directed to file an affidavit of their assets as on today in Form 16A, Appendix E under Order XXI Rule 41(2) of the Code of Civil Procedure within 30 days. Respondent No.1, 2, 12 and 13 are directed to file an additional affidavit in the format of Annexure B-1 and respondents No.3 to 11 are directed to file an additional affidavit in the format of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Conciliation Act. 3. Respondent No.2 has raised two objections. The first objection is that there is no arbitration agreement between the petitioner and respondent No.2; and the Emergency Arbitrator has misapplied the concept of Group of Companies doctrine to implead respondent No.2. According to respondent No.2, the Group of Companies doctrine applies only in proceedings under Section 8 of the Arbitration and Conciliation Act for transfer of proceedings pending in Court to arbitration where the plaintiff claims through a person who is a party to an arbitration agreement. According to respondent No.2, Group of Companies doctrine cannot be invoked to implead respondent No.2. 4. The second objection of respondent No.2 is that the order of the Emergency Arbitrator is Nullity insofar as respondent No.2 is concerned as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 encumbered. On 29th August, 2020, FRL controlled by Biyanis, in violation of its contractual obligations, approved transaction relating to the transfer of its retails assets to Mukesh Dhirubhai Ambani Group (hereinafter referred to as MDA ) which is a Restricted Person as per FCPL-SHA (hereinafter referred to as Disputed Transaction ). 10. On 05th October 2020, the petitioner initiated the arbitration proceedings on the basis of the arbitration agreement contained in Clause 25.2.1 of the Shareholders Agreement dated 22nd August, 2019 which provides for resolution of disputes between the parties according to the Rules of Singapore International Arbitration Centre (SIAC). Clause 25.1 provides that the agreement shall be governed by and construed in accordance with Laws of India and Courts at New Delhi shall have exclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and the reasoned findings. The contentions of the petitioner are recorded in paras 51 to 57 whereas contentions of the respondents are recorded in paras 58 to 93 of the interim order. II. Findings of the Emergency Arbitrator 19. The Emergency Arbitrator held that the Emergency Arbitrator is an Arbitral Tribunal for all intents and purposes. The Emergency Arbitrator further noted that the Emergency Arbitrators are recognized under the Indian Arbitration framework. The relevant portion of the interim award containing the discussion on the objections raised by the respondents to the validity of the Emergency Arbitration are as under: VIII. EMERGENCY ARBITRATION A. The Validity of the Appointment 97. FRL and the Majority Respondents both object to the jurisdiction of this Tribunal on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt 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 is trite that the parties cannot resile from the terms of their arbitration agreement, including their agreement to allow either party to request the appointment of an emergency arbitrator. Further, Section 17 of the Indian Arbitration Act 1996, which empowers an arbitral tribunal to grant interim reliefs, does not preclude or intimate that parties cannot agree to institutional rules which allow recourse to emergency arbitration. In the absence of a mandatory prohibition contained in the Indian Arbitration Act 1996 or public policy constraints, the parties may agree to any arbitral procedure. 102. The Indian Arbitration Act 1996, therefore, does not preclude parties from agreeing to arbitrate under institutional rules that allow either party to request appropriate reliefs from an emergency arbitrator. The Respondents reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 agreement they made with the Claimant. B. Emergency Arbitrators are recognised under the Indian Arbitration Framework 105. The Claimant rightly asserts that the Respondents insistence that the notion of emergency arbitration is alien to, or not contemplated by the Indian Arbitration Act 1996, is, in fact, contrary to the practice adopted by Indian courts. Indian courts, including the Supreme Court of India, have considered cases involving orders/awards issued by an emergency arbitrator within the framework of the Indian Arbitration Act 1996. In none of the cases did any Indian Court cast any doubt over the recognition of the remedy of emergency arbitration under Indian law. That the Respondents could not cite any authority to support their submissions on this issue is telling. 106. Notably, all the Parties were advised by first-tier Indian law firms when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les 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 measures, if this was merited. (Emphasis supplied) 20. Future Retail Limited (respondent No.2) raised an objection before the Emergency Arbitrator that respondent No.2 was not signatory to the FCPL SHA, and therefore, cannot be drawn into the arbitration proceedings. The learned Arbitrator rejected this objection after a detailed analysis of the submissions. Relevant portions of the interim order are reproduced hereunder: IX. WHEN NON-SIGNATORIES CAN PROPERLY BE MADE PARTIES TO ARBITRAL PROCEEDINGS A. The Arbitration Agreement 1. The Signatories to the Arbitration Agreement 110. FRL was not a signatory to the FCPL SHA, which is the Claimant s stated basis for these proceedings. FRL asserts that as it has not signed and is not otherwise a party to that agreement and/or the stipulated arbitration clause, it is a stranger to these proceedings. An emergency arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 Cheran Properties Ltd. v. Kasturi and Sons Ltd. (2018) 16 SCC 413 ( Cheran ), another three-judge bench of the Supreme Court of India more recently emphasised that the Section 7 requirement of the Indian Arbitration Act 1996 that an arbitration agreement must be in writing, does not exclude the possibility of binding third parties who may not be signatories to an agreement between two contracting entities. After specifically considering the earlier judgment in Indowind, it noted that the law has evolved. The Court explicitly noted that in certain situations, an arbitration agreement between two or more parties may operate to bind other parties as well. 117. MTNL v. Canara Bank 2019 SCC Online SC 995 ( MTNL ), a decision of a two-judge bench of the Supreme Court of India, given in 2019, reaffirmed that a non-signatory can be bound by an arbitration agreement on the basis of the Group of Companies doctrine, where the cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociation 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 Agreements; (b) simultaneous discussions and negotiations on all the Agreements; (c) single / common team representing all Respondents including FRL vis- -vis the Claimant in those discussions and negotiations including the FRL SHA; (d) full awareness and knowledge of all the Respondents (including FRL) that protective, special and material rights are being created in favour of Respondent No. 1 for the Claimant s benefit; (e) Respondent No. 2 being the beneficiary of investment by the Claimant; (f) statutory disclosures made by Respondent No. 2 to the public i.e. disclosures dated 12 August 2019 and 22 August 2019; (g) conduct of the parties; and (h) the object that the parties sought to achieve by entering into these agreements i.e. for the Claimant to become the single largest shareholder of FRL implemented through preservation of the Retail Assets in FRL and preservation of Promoters shareholding in FRL free from any Encumbrance. Even as recently as April t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 investment made by the Claimant into FCPL and rights created in favour of FCPL for the benefit of the Claimant. 124. FRL s conduct reinforces this position - its disclosures in August 2019 about the FRL SHA and the FCPL SHA, as well as its execution of the 19 December 2019 Letter confirms that it was aware of and in fact, considered itself bound by the terms of the FCPL SHA. FRL s contention that the disclosure dated 22 August 2019 was merely for informational purposes is misleading and contrary to legal requirements, which clearly stipulate disclosure requirements for events that are material for a listed entity. This is consistent with the Respondents conduct in the present arbitration, in as much as both FCPL and FRL have adopted an identical position in these proceedings. 125. The Claimant submits that a cumulative consideration of all the aforementioned relevant considerations clarifies the frivolity of FRL s objection. The isolated references made to the extent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 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 Assets) under the FCPL SHA read with the FRL SHA is fully compliant with all laws. It is relevant that the Claimant could, in any event, have directly made the same investment into FRL under the foreign portfolio investor route recognized under Indian law and also obtained the same protective, special and material rights in FRL. Therefore, any question of the Claimant s investment being in violation of India s Foreign Direct Investment laws does not arise. Even otherwise, the Claimant s ability to exercise the FRL Call Option, as provided under Section 15 of the FCPL SHA, clearly recognises that such an option will be exercised only in a manner compliant with Indian laws. 2. Analysing the Submissions 130. Over the course of the last decade, the Supreme Court has conspicuously been at the forefront of a growing international consensus on how and when arbitral tribunals might legitimately exercise jurisdiction over intimately related parties involved in closely connected transactions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. 78. In India, the law has been construed more liberally, towards accepting incorporation by reference. In Vessel M.V. Baltic Confidence v. State Trading Corpn. of India Ltd., the Court was considering the question as to whether the arbitration clause in a charter party agreement was incorporated by reference in the bill of lading and what the intention of the parties to the bill of lading was. The pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignatory is bound (and benefited) by an arbitration agreement ... include both purely consensual theories (e.g., agency, assumption, assignment) and non- consensual theories (e.g. estoppel, alter ego). Explaining the application of the alter ego principle in arbitration, Born notes: Authorities from virtually all jurisdictions hold that a party who has not assented to a contract containing an arbitration clause may nonetheless be bound by the clause if that party is an alter ego of an entity that did execute, or was otherwise a party to, the agreement. This is a significant, but exceptional, departure from the fundamental principle ... that each company in a group of companies (a relatively modern concept) is a separate legal entity possessed of separate rights and liabilities. 28. Explaining group of companies doctrine, Born states: the doctrine provides that a non-signatory may be bound by an arbitration agreement where a group of companies exists and the parties have engaged in conduct (such as negotiation or performance of the relevant contract) or made statements indicating t he intention assessed objectively and in good faith, that the non-signatory be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a parent company, or inclusion of a third party to an arbitration, if there is a direct relationship between the party which is a signatory to the arbitration agreement; direct commonality of the subject matter; the composite nature of the transaction between the parties. A composite transaction refers to a transaction which is inter-linked in nature; or, where the performance of the agreement may not be feasible without the aid, execution, and performance of the supplementary or the ancillary agreement, for achieving the common object, and collectively having a bearing on the dispute. . 10.9. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that the Claimant has misled the CCI on the structure of the relationships among the Parties. I do not think there is much substance in any of these arguments. First, the stake was not a direct investment made by the Claimant, but one through an Indian Owned Controlled Entity. This is a permissible arrangement under Indian law and appears to have received regulatory scrutiny. Second, the Agreements do not confer, and the Claimant has not attempted to assert control of or over FRL. 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. 139. The following factors submitted by the Claimant prima facie make out a strong case for including FRL in these proceedings, by viewing it as being within the scope of the arbitration clause: (a) the intertwined content of the Agreements with several cross refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is essentially a domestic agreement) has an SIAC dispute resolution clause. 140. It is also material that, before the effective date of the Agreements, FRL accepted the 19 December 2019 Letter sent by FCPL, without qualification. The 19 December 2019 Letter manifested the interconnectivity of the Agreements and, in particular, the dispute resolution clauses. The sending and acceptance of the 19 December 2019 Letter stating the names of the Restricted Persons was a precondition required by the Claimant, prior to the Effective Date of the FCL SHA and SSA coming into force. The Claimant only made its investment on 26 December 2019 after this was done. Given its pertinence, the 19 December 2019 Letter is reproduced below, for easy reference: 141. Paragraph 5 of the 19 December 2019 Letter incorporates any dispute over the disposal of the Retail Assets to a Restricted Person, under the terms of the FRL SHA, into the FCPL SHA. It creates a direct link between the FCPL SHA (pursuant to which the letter was sent) and the FRL SHA to resolve disputes, should a breach take place. This is precisely the situation here. 142. In Chloro, the Supreme Court set ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p of affiliated companies entering into an indivisible contractual arrangement with the Claimant within a conceptual framework that they all unequivocally consented to. 21. The learned Arbitrator recorded the contentions of the petitioner on merits in paras 173 to 203 and the respondents contentions in paras 204 to 223. The analysis of the contentions of the parties is recorded in paras 224 to 236 of the award. In para 237, the learned Arbitrator recorded his satisfaction that the petitioner has made out a strong prima facie case that the respondents are in breach of their contractual obligations and/or undertakings to the petitioner under the three agreements. Paras 224 to 237 of the interim order are reproduced hereunder: 4. Analysis of Parties Contentions i. The Merits 224. It is not disputed by the Respondents that the Claimant entered into the subject transactions on the basis of being accorded two broad categories of special and protective rights. The first is that the Retail Assets of FRL would not be alienated without its prior written consent, and never to a Restricted Person. The Respondents further agreed that FRL would remain the sole vehicle fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etail Assets that the Claimant has under the contractual arrangements entered into with the Respondents will be irretrievably lost. There is substance in the Claimant s submission that the widespread network of retail stores across India, which was built by FRL over a period of several years is a uniquely strategic asset for it. 230. It is apparent that the Respondents have acted in concert contrary to the obligations they have undertaken and in a manner that is inimical to the Claimant s interests. 231. Even accepting Mr. Singh s statement from the Bar that 5.53 % of the shares were sold on 10 September 2020, the Promoters continue to collectively remain the single largest shareholders of FRL with fragmented public shareholding, and are therefore in control of FRL. In various public filings made by FRL, the Majority Respondents have been identified and hold themselves out as promoters of FRL. Indian law defines a promoter to include a person or set of persons who have control over the affairs of the issuer whether as a shareholder, director or otherwise , or a person in accordance with whose advice, directions or instructions the board of directors of a company i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to show whether any enquiry was made as to whether the Claimant had given its consent and or the minutes of any FCPL board meeting on the consent issue. For completeness, I should add that I am not quite convinced that the Board Resolution is void as asserted by the Claimant. But that legal characterisation is not material for now. What is important for present purposes is that they have prima facie established that the Respondents have breached a number of their contractual obligations. 235. Mr. Singh very properly did not attempt to argue that no contractual breaches had been committed by the Majority Respondents. Instead, he premised his submissions on the basis that I was to assume against [his clients] the way that the cause of action has been framed by the [C]laimant . Mr. Salve also adopted a similar stance and made his submissions on a demurrer basis without 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 and 29 August 2020, no disclosure was ever made by the Promoters about the key terms of Track 1. How was the Claimant expected to match this? When did the Respondents actually decide to disengage from the Claimant? Why were the Respondents not candid with the Claimant? 256. The central plank of Mr. Singh s submissions is attractive for its enticing simplicity. It is that since the unencumbered portion of the Promoters shares is now merely nearly 0.5% there is no realistic possibility of the Claimant ever becoming FRL s largest shareholder if and when legally permitted. However, I cannot agree with this submission. The discussions that the Claimant and the Respondents were engaged in were meant to address this particular problem as well. Accepting that the Respondents position(s) had been prejudiced, the Claimant agreed to work with the Respondents to repair the damage. Mr. Yeo is correct in saying that the Claimant was not sitting on [its] hands. 257. The correspondence and the exchanges summarised above clearly show that the Claimant was actively committed to working with the Respondents. The intention was to formulate a rescue package that would address all the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was aware that the Respondents were engaged in discussions with Reliance it has not been suggested that they were aware of the precise details of what it entailed save for what was being reported in the media. The documents on record show that the Respondents fobbed off the Claimant when it queried them. All the Claimant could do (and did) was to ask for updates and remind them of their legal obligations not to dispose of the Retail Assets and or deal with a Restricted Entity. 260. The Respondents had, in good times, entered into a long-term commercial arrangement with the Claimant. In exchange for a very substantial investment that benefitted FRL the Respondents conferred a number of rights on the Claimant and emphatically undertook to protect them. Their relationship was by no means a short-term commercial flirtation of convenience. There were no force majeure clauses or exit terms that allowed any of the Parties to resile from their obligations if and when the going got tough. The Agreements envisaged an enduring and deep relationship that was intended to survive through thick and thin. These contractual undertakings obliged the Respondents to work with the Claimant to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isputed Transaction if it can make out the grounds for such relief . As the Parties have agreed to resolve all their differences under the auspices of an SIAC Tribunal, this is not a pertinent consideration. 265. As set out above, the Respondents additionally submit that FRL is a listed company with more than three hundred thousand (300,000) shareholders, over twenty-five thousand (25,000) employees and several other stakeholders (including banks and financial institutions). The COVID-19 pandemic, they say has had a significant impact on Indian businesses, particularly the retail sector in which FRL carries on business. The Disputed Transaction seeks to protect the interest of all these stakeholders through a large infusion of funds and acquisition of liabilities of the business. If the reliefs sought by Amazon are granted, it may seriously jeopardise the Disputed Transaction and the interest of the FRL s stakeholders would be adversely affected. The loss and damage caused to FRL and its stakeholders would not be capable of being safeguarded by any cross- undertaking on damages by Amazon. 266. These are not implausible considerations, although I remain to be persuaded tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant and the loss of its interests in these Retail Assets cannot be compensated in monetary terms. The Respondent's entire premise of damages being the only remedy is wrong. 269. In this context it is pertinent to note that the Parties themselves agreed in the FCPL SHA (as well as the FRL SHA and the SSA) that: 27.7 Remedies (ii) The Parties also agree that damages may not be an adequate remedy for a breach of this Agreement and the Parties shall he entitled to an injunction, restraining order, right for recovery, suit for specific performance or such other equitable relief as a court of competent jurisdiction may deem necessary or appropriate to restrain the other Party from committing any violation or enforce the performance of the covenants, representations and obligations contained in this Agreement. [emphasis in italics added] 270. It is plain that the Claimant s interests in FRL and the related entities represent a unique proposition to it from a strategic national and global perspective. This was not just a skin-deep business investment by a sleeping partner. The Claimant evinced every intention of growing a deeper and broader relationsh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal to be constituted and after that to consider any applications for interim relief (let alone finally determine the Parties differences). The greater the progress made towards the completion of the Disputed Transaction, the harder it will be to unravel it. Over time, the interests of additional third parties may also become entwined with the Disputed Transaction and be subsequently compromised. 274. In sum, the more delay in giving relief the greater the prejudice to the Claimant. It is apparent that at some point of time in the very near future, restoring the Claimant s rights will become impossible. The grave and imminent threat to the destruction of the rights conferred on it by the Respondents under the Agreements merit immediate interim relief. 275. In the circumstances, I am prima facie satisfied that it is just that the Claimant be entitled to orders/directions restraining the Respondents from proceeding further with the Disputed Transaction until further order from the Tribunal. This is to take effect immediately on notification of this Interim Award. The Claimant is to provide within 7 days from the date hereof a cross-undertaking in damages to the Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Granted, the COVID-19 pandemic had caused them unforeseeable difficulties as well as substantial losses and, without fresh capital, FRL s future appears unstable. But, even in these situations, the law expects businesspersons to honour their contractual commitments unless these have been legally vitiated or modified. Economic hardship alone is not a legal ground for disregarding legal obligations. The Respondents have given no good legal reasons for effecting the sale of FRL s Retail Assets behind the Claimant s back and thereby gravely comprising its interests. 281. FRL s retail chains are unique and have peculiar strategic importance and value to the Claimant. The grave and imminent threat to the destruction of the rights conferred on it by the Respondents under the Agreements merit immediate interim relief. 282. The Majority Respondents have asserted that the horse has bolted and that, consequentially, the Claimant no longer has any legitimate interests meriting protection. This is incorrect. 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 contractual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner 26. The Biyanis led by Kishore Biyani (respondent No. 3) and Rakesh Biyani (respondent No. 8) are the controlling shareholders of Future Retail Limited ( FRL ) and Future Coupons Private Limited ( FCPL ). Mr. Kishore Biyani is the Executive Chairman and Director of FRL, and Mr. Rakesh Biyani is the Managing Director of FRL. 27. FRL is India s second largest organized offline retailer and has approximately 1,534 retail stores across India. Its widespread retail network is, therefore, an invaluable strategic asset. 28. The Biyanis wanted to collaborate with strategic foreign investors with a long-term vision to grow the business of the Future group, who would be a long-term partner and stakeholder in FRL, and would further enable Biyanis to monetize their existing shareholding in FRL. If and when Indian laws changed, this investor could choose to become the controlling shareholder of FRL. 29. As a first step, the Biyanis re-structured an existing Future group entity, FCPL, to acquire securities of FRL, and correspondingly, acquire special, material and protective rights in FRL. This structure enabled the Biyanis to attract an investor and ensure that the investor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the list agreed by Biyanis in the FCPL- SHA. 42. On 26th December 2019, Amazon invested ₹ 1431 Crore in FCPL and the FCPL-SHA came into effect. This entire amount was invested by FCPL in FRL as agreed in the SSA. 43. On 26th December 2019, the Articles of Association of FCPL were amended by the Biyanis to reflect Amazon s rights, including the fact that Biyanis will not exercise FCPL s limited rights in FRL without Amazon s consent. 44. In June 2020, the Biyanis and FRL directly approached Amazon to provide additional funding to FRL. At that time, FRL represented to Amazon and other existing investors that FRL needed INR 5000 Crores to resolve its distress. FRL also indicated that any further funding from Amazon could come through the same structure as Amazon s investment in FCPL. 45. While Amazon was engaging in discussions with FRL to resolve FRL s problems, FRL entered into discussions with MDA Group. 46. On several occasions, including 27th August 2020, Amazon enquired about the discussions with MDA Group but FRL only provided vague responses. 47. On 29th August 2020, FRL announced that its Board of Directors had approved a transaction with a Restricte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. 54. On and from 26th October 2020, FRL began publicly impugning the validity of the EA Order by claiming it was a nullity under Indian law. FRL also actively pursued regulators to ignore the EA Order and grant their approvals for the Disputed Transaction. 55. With a view to mount a collateral challenge to the ongoing Arbitral Proceedings and the EA Order, FRL filed a suit before this Court on the ground that Amazon was interfering with a lawful transaction between FRL and MDA Group. FRL also sought interim relief seeking to restrain Amazon from writing to regulators. However, during the hearing of the I.A No. 10376 of 2020, FRL stated that it was not claiming an antiarbitration injunction, nor was it challenging the EA Award. The learned Single Judge in the order dated 21st December 2020 has noted: Mr. Harish Salve, learned Senior Counsel appearing for the plaintiff further stated that in the interim application, he is not seeking any anti arbitration injunction or any anti suit injunction 56. FRL had raised an objection to the jurisdiction before the SIAC Court on the ground that it was not a party to the arbitration agreement in terms of Rule 28 of the SIAC R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the Emergency Arbitrator is enforceable as an order of the Court under Section 17(2) of the Arbitration and Conciliation Act. 65. Section 2(6) of the Arbitration and Conciliation Act gives freedom to the parties to authorize any person including an institution to determine the disputes between the parties. Section 2(8) of the Arbitration and Conciliation Act provides that the agreement to authorize an institution shall include any Arbitration Rules referred to in that agreement. 66. The Emergency Arbitrator is an arbitrator under SIAC Rules read with Section 2(1)(d), 2(6) and 2(8) of Arbitration and Conciliation Act. Under SIAC Rules, Emergency Arbitrator occupies the position of and functions as an arbitrator till the Arbitral Tribunal is fully constituted. Rule 1.3 of SIAC Rules defines an Emergency Arbitrator as an arbitrator appointed in accordance with Schedule 1. Rules 38, 39 and Schedule 1 - Rules 4, 5, 7, 8 and 12 reinforce the position that an Emergency Arbitrator occupies the position of an Arbitrator and functions as an Arbitrator. 67. The interim order dated 25th October, 2020 contains interim injunctions to protect and safeguard the subject matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17(2) creates a legal fiction which has to be construed no wider than its plain language permits. The Section provides that any order issued by the arbitral tribunal under this section. is enforceable as an order of the Court. The order under Sections 17 (1) is an order which may be made during the arbitral proceedings , or an order which may be made after the making of the arbitral award . . The arbitral proceedings before a Tribunal can only commence after the appointment of the Arbitral Tribunal. 75. The order of an Emergency Arbitrator is not an order of the Arbitral Tribunal. It is not an order that can be appealed under Section 37 since it is not an order of the arbitral tribunal . 76. The question whether an Emergency Arbitrator can or cannot be appointed, consistent with Indian law and in an arbitration governed by the Act is a secondary issue. In the first instance, even if the parties can, by an agreement, agree to the appointment of an Emergency Arbitrator (by choosing Rules of procedure which envisage the appointment of an Emergency Arbitrator), such an arbitrator is not the arbitral tribunal within the meaning of section 2 (1) (d) of the Act. 77. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ergency Arbitrator, including a ruling on his own jurisdiction. The Tribunal is not bound by the reasons given by the Emergency Arbitrator. Any interim order or Award issued by the Emergency Arbitrator shall, in any event, cease to be binding if the Tribunal is not constituted within 90 days of such order or Award or when the Tribunal makes a final Award or if the claim is withdrawn. 83. According to respondent No.2, the petitioner s reliance on the Rules of the Delhi International Arbitration Centre, Mumbai Centre of International Arbitration and Madras High Court Arbitration Centre, which provide for emergency arbitration procedures to contend that Emergency Arbitration is recognised under Indian law is misconceived as these Rules cannot override the mandatory provisions of the Act. In fact, these Rules (Rule 1.2 of the DIAC Rules, Rule 1.1 of the MCIA Rules and Rule 1.4 of the MHCAC Rules) provide that in the event that any of the Rules are in conflict with a mandatory provision of law applicable to the arbitration / arbitration agreement from which the parties cannot derogate, the mandatory provision would prevail. These Rules are also applicable to foreign seated arbitrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents, contrary to the directions of the EA Order, including the no objection granted by SEBI dated 20th January 2021 as also the approvals granted by BSE, NSE and CCI. It is pertinent to mention that the Delhi High Court by its Order dated 21st December, 2020 has directed the statutory authorities /regulators to apply their mind to the facts and legal issues and come to the right conclusion and take a decision after considering the representations and counter representations of FRL and Amazon to the statutory authorities and regulators. Further to such directions of the Delhi High Court, SEBI/Stock Exchanges has granted approval in accordance with law. 88. On 26th January, 2021, FRL has filed the Scheme of Amalgamation with the National Company Law Tribunal, Mumbai Bench before whom the matter is pending and will be decided in accordance with the procedure under Section 230 of the Companies Act, which is a self-contained code. 89. Reliance is placed on paras 7.10, 9.17, 9.19, 9.18, 10.31, 11.16, 11.22, 12.3 and 13 of the judgment dated 21st December, 2020 in CS(COMM) 493/2020 titled Future Retail Ltd. v. Amazon.Com Investment Holdings LLC, 2020 SCC OnLine Del 1636. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. 94. FRL is not a party to Shareholders Agreement dated 22nd August, 2019 and to Share Subscription Agreement dated 22nd August, 2019 between Amazon, FCPL and the promoters, Biyanis, whereas Amazon is not a party to the agreement dated 12th August, 2019 between FRL, FCPL and the promoters. The plea of Amazon that the aforesaid three agreements constituted a single integrated bargain is misconceived which is clear from the relevant clauses of the agreement. If the three agreements are treated as a single integrated transaction, it would violate the provisions of the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (FEMA FDI Rules). Reference is made to paras 10.29, 10.30 and 10.31 of the Future Retail Ltd. v. Amazon.Com Investment Holdings LLC (supra). 95. Prayer (e) of this petition seeking restraint against the respondents from relying upon the approval granted by any regulatory body/agency contrary to the Emergency Arbitrator order is a backdoor challenge to the regulatory authorities decision in accordance with law. 96. Amazon has challenged the order dated 21st December, 2020 in Future Retail Ltd. v. Amazon.Com Investment Holdings LLC (supra) before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions in a weak effort to camouflage its arguments on the merits of the EA Order as a 'jurisdictional challenge'. 99. FRL had raised the same objections before the Emergency Arbitrator regarding its legal status under the Arbitration and Conciliation Act, 1996, which was rejected by the Emergency Arbitrator after a proper hearing and through a detailed and reasoned order. 100. Having done so and lost before the Emergency Arbitrator, FRL cannot unilaterally claim that the EA Order is a nullity. The EA Order continues to be valid and binding qua parties having been passed in accordance with the SIAC Rules. 101. The concept of party autonomy and its consequences have been both accepted by the learned Single Judge who has found that an Emergency Arbitrator falls within the definition of arbitral tribunal and the selection of SIAC Rules which recognize an EA Order, is permissible under Indian law. 102. FRL erroneously alleges that the EA Order has been superseded by the order of the learned Single Judge. The learned Single Judge did not go into the merits of the EA Order and expressly holds that the court could not have gone into the same. The learned Single Judge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 28.1 of the SIAC Rules before the SIAC Court. The SIAC Court rejected FRL s contention vide its letter dated 25th November 2020, holding that it is prima facie satisfied that the arbitration shall proceed. 110. FRL raised the same objection under Schedule I, Rule 7 of the SIAC Rules before the Emergency Arbitrator on 7th October 2020. This objection was rejected by the EA Order on 25th October 2020. This objection was rejected by the Emergency Arbitrator giving detailed reasons. 111. FRL has in accordance with Rule 28.2 of the SIAC Rules read with Section 16 of the Arbitration and Conciliation Act, 1996 raised this objection before the Tribunal vide its emails dated 16th January 2021 and 28th January 2021. A challenge to the jurisdiction of the Arbitral Tribunal can only be raised in a manner recognised under the Arbitration and Conciliation Act, 1996 and raising such a challenge in the present enforcement proceeding is not in accordance with the Arbitration and Conciliation Act, 1996. 112. The Emergency Arbitrator's finding that FRL is a proper party to the arbitration is now sought to be assailed on merits by urging this Court to go behind the EA Order, by erro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96. 120. FRL has not challenged the EA Order on merits in the Suit. Further, during the course of arguments in the Suit, FRL gave up its prayer to interdict the proceedings in the arbitration to which FRL is a party. The occasion of adverting to the reasoning of the Emergency Arbitrator or superseding or vacating the EA Order did not arise in the Suit. Amazon has no control over FRL 121. FRL now alleges that the EA Order is a nullity as combining the two agreements would result in Amazon acquiring control over FRL, and this would be violative of FEMA. This constitutes, at best a defence in the Arbitration proceedings and, in fact, was urged as a defence in the Arbitration Proceedings. This is not an argument on nullity. It is an argument on merits, which has been rejected by the Emergency Arbitrator. 122. The plain facts are that Respondents induced an investment from Amazon based on specific representations, that the investment is in accordance with law and that the control remains with the respondents despite the special, material and protective rights. 123. However, the Respondents, contrary to the express terms of the Agreements and their representations, act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a transaction with a Restricted Person, namely the MDA Group. 131. FRL entered into the Disputed Transaction, despite the fact that it had been engaging with Amazon until four days before the Disputed Transaction being announced. Hence, any allegation that Amazon did not engage to find a solution or to take care of FRL in their financial distress is factually incorrect and false. Amazon reiterates its stated position to assist FRL and explore viable solutions for FRL. In fact, this plea was rejected by the Emergency Arbitrator with the following findings; (i) The respondents had, in good times, entered into a long term commercial arrangements with Amazon entities in exchange for a very substantial investment that benefitted FRL, the respondents conferred a number of rights on Amazon and emphatically undertook to protect them. (ii) The relationship between Amazon and the respondents was by no means a short term commercial flirtation of convenience. (iii) Biyanis first drove and then caused FRL to enter into the Disputed Transaction. (iv) Amazon was not an idle spectator and actively sought to engage with the Respondents to support an alternative rescue scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , arbitration agreement means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement. (3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained in- (a) a document signed by the parties; (b) an exchange of letters, telex, telegrams or other means of telecommunication including communication through electronic means which provide a record of the agreement; or (c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. (5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract. Section 17 - Interim measures ordered by arbitral tribunal (1) A party may, during the arbitral proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being in force, an appeal] shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:- (a) refusing to refer the parties to arbitration under Section 8; (b) granting or refusing to grant any measure under Section 9; (c) setting aside or refusing to set aside an arbitral award under Section 34. (2) An appeal shall also lie to a Court from an order of the arbitral tribunal- (a) accepting the plea referred to in sub-section (2) or sub-section (3) of Section 16; or (b) granting or refusing to grant an interim measure under Section 17. (3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court. Code of Civil Procedure, 1908 Section 51 - Powers of Court to enforce execution Subject to such conditions and limitations as may be prescribed, the Court may, on the application of the decree-holder, order execution of the decree- (a) by delivery of any property specifically decreed; (b) by attachment and sale or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arty against whom a decree for specific performance or for an injunction has been passed is a corporation, the decree may be enforced by the attachment of the property of the corporation or, with the leave of the Court, by the detention in the civil prison of the directors or other principal officers thereof, or by both attachment and detention. (3) Where any attachment under sub-rule (1) or sub-rule (2) has remained in force for six months if the judgment-debtor has not obeyed the decree and the decree-holder has applied to have the attached property sold, such property may be sold; and out of the proceeds the Court may award to the decree-holder such compensation as it thinks fit, and shall pay the balance (if any) to the judgment-debtor on his application. (4) Where the judgment-debtor has obeyed the decree and paid all costs of executing the same which he is bound to pay, or where, at the end of six months from the date of the attachment, no application to have the property sold has been made, or if made has been refused, the attachment shall cease. (5) Where a decree for the specific performance of a contract or for an injunction has not been obeyed, the Court m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is prima facie satisfied that the arbitration shall proceed. The arbitration shall be terminated if the Court is not so satisfied. Any decision by the Registrar or the Court that the arbitration shall proceed is without prejudice to the power of the Tribunal to rule on its own jurisdiction. 28.2 The Tribunal shall have the power to rule on its own jurisdiction, including any objections with respect to the existence, validity or scope of the arbitration agreement. An arbitration agreement which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the Tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration agreement, and the Tribunal shall not cease to have jurisdiction by reason of any allegation that the contract is non-existent or null and void. 28.3 Any objection that the Tribunal: a. does not have jurisdiction shall be raised no later than in a Statement of Defence or in a Statement of Defence to a Counterclaim; or b. is exceeding the scope of its jurisdiction shall be raised within 14 days after the matter alleged to be beyond the scope o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and expenses for proceedings pursuant to this Schedule 1. In appropriate cases, the Registrar may increase the amount of the deposits requested from the party making the application. If the additional deposits are not paid within the time limit set by the Registrar, the application shall be considered as withdrawn. 3. The President shall, if he determines that SIAC should accept the application for emergency interim relief, seek to appoint an Emergency Arbitrator within one day of receipt by the Registrar of such application and payment of the administration fee and deposits. 4. If the parties have agreed on the seat of the arbitration, such seat shall be the seat of the proceedings for emergency interim relief. Failing such an agreement, the seat of the proceedings for emergency interim relief shall be Singapore, without prejudice to the Tribunal s determination of the seat of the arbitration under Rule 21.1. 5. Prior to accepting appointment, a prospective Emergency Arbitrator shall disclose to the Registrar any circumstances that may give rise to justifiable doubts as to his impartiality or independence. Any challenge to the appointment of the Emergency Arbitrator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate security. 12. The parties agree that an order or Award by an Emergency Arbitrator pursuant to this Schedule 1 shall be binding on the parties from the date it is made, and undertake to carry out the interim order or Award immediately and without delay. The parties also irrevocably waive their rights to any form of appeal, review or recourse to any State court or other judicial authority with respect to such Award insofar as such waiver may be validly made. 13. The costs associated with any application pursuant to this Schedule 1 may initially be apportioned by the Emergency Arbitrator, subject to the power of the Tribunal to determine finally the apportionment of such costs. 14. These Rules shall apply as appropriate to any proceeding pursuant to this Schedule 1, taking into account the urgency of such a proceeding. The Emergency Arbitrator may decide in what manner these Rules shall apply as appropriate, and his decision as to such matters is final and not subject to appeal, review or recourse. The Registrar may abbreviate any time limits under these Rules in applications made pursuant to proceedings commenced under Rule 30.2 and Schedule 1. (Emphas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntment. The Emergency Arbitrator shall provide a reasonable opportunity of being heard to all the parties before granting any urgent, interim or conservatory measures and proceed to make an order by giving reasons. The parties shall comply with any order made by the Emergency Arbitrator. 14.8 The Emergency Arbitrator shall have the power to order any interim relief that he deems necessary. An order of the Emergency Arbitrator shall be made in writing, with a brief statement of reasons. An order or award of an Emergency Arbitrator shall be enforceable in the manner as provided in the Act. 14.9 The Emergency Arbitrator shall ensure that the entire process from the appointment of the Emergency Arbitrator to making the order shall be completed within seven (7) days. 14.10 The Emergency Arbitrator shall become functus officio after the order is made and shall not be a part of the Arbitral Tribunal, which may be formed subsequently and in accordance with Rule 14 unless otherwise agreed to by all the parties. 14.11 The order for urgent interim or conservatory measures passed by the Emergency Arbitrator shall not bind the Arbitral Tribunal on the merits of any issue or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st adopted by International Centre for Dispute Resolution of American Arbitration Association (AAA) in 2006, followed by Singapore International Arbitration Centre (SIAC) in 2010; Stockholm Chambers of Commerce (SCC) in 2010; International Chamber of Commerce (ICC) in 2012; and Hong Kong International Arbitration Centre in 2013. Swiss Chambers Arbitration Institution; London Court of International Arbitration (LCIA); International Institute for Conflict Prevention and Resolution; China International Economic and Trade Arbitration Commission; Australian Centre for International Commercial Arbitration; Kigali International Arbitration Centre; Asian International Arbitration Centre and Dubai International Finance Centre have also incorporated the provisions relating to the Emergency Arbitration in their Rules. 136. In our country, the provisions relating to Emergency Arbitration have been incorporated by Delhi International Arbitration Centre (DIAC); Mumbai Centre for International Arbitration (MCIA); Madras High Court Arbitration Centre (MHCAC); Nani Palkhivala Arbitration Centre; Indian Council of Arbitration; Indian Institute of Arbitration Mediation; and Bangalore Internatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedure to be followed by the Arbitral Tribunal in conducting its proceedings. 141. Section 2(1)(a) of the Arbitration and Conciliation Act defines arbitration as any arbitration whether or not administered by permanent arbitral institution. Section 2(1)(a) is an inclusive definition which includes ad hoc as well as institutional arbitration. Section 2(1)(c) defines arbitral award to include an interim award. Section 2(1)(d) defines arbitral tribunal to mean a sole arbitrator or a panel of arbitrators. 142. Section 17 of the Arbitration and Conciliation Act empowers the arbitral tribunal to pass an interim order and Section 17(2) provides that the interim order passed by the Arbitral Tribunal shall be deemed to be an order of the Court and shall be enforceable as an order of the Court. 143. By virtue of Section 2(8) of the Arbitration and Conciliation Act, the Rules of Singapore International Arbitration Centre are incorporated in the arbitration agreement between the parties. By incorporating the Rules of SIAC into the arbitration agreement, the parties have agreed to the provisions relating to Emergency Arbitration. 144. This Court is of the view that the Eme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Court in Ashwani Minda v. U-Shin Ltd., (2020) SCC OnLine Del 721 . In Ashwani Minda (supra), a dispute arose out of a joint venture agreement between an Indian entity and a Japanese entity. The joint venture agreement contained an arbitration clause for resolution of disputes raised by the Indian entity under the Rules of Japan Commercial Arbitration Association (JCAA) and the seat of arbitration was Japan. The Indian entity invoked the arbitration and filed an application for interim relief which was considered and rejected by the Emergency Arbitrator. The Indian entity thereafter filed a petition for interim relief before this Court under Section 9 of the Arbitration and Conciliation Act. The learned Single Judge dismissed the petition holding that the Emergency Arbitrator rejected the claim by a very detailed and reasoned order and the claimant cannot invoke the jurisdiction under Section 9 of the Arbitration and Conciliation Act. The learned Single Judge further noted that the Court, in a petition under Section 9 of the Act, cannot sit as a Court of Appeal to examine the order of the Emergency Arbitrator. The learned Single Judge further noted that the mandate of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f para 1 of the judgment is reproduced hereunder: The expanding need for international arbitration and divergent schools of thought, have provided new dimensions to the arbitration jurisprudence in the international field. The present case is an ideal example of invocation of arbitral reference in multiple, multi-party agreements with intrinsically interlinked causes of action, more so, where performance of ancillary agreements is substantially dependent upon effective execution of the principal agreement. (Emphasis supplied) 154. The Supreme Court formulated the following question for consideration in para 1.3 of the judgment: 1.3. Whether in a case where multiple agreements are signed between different parties and where some contain an arbitration clause and others do not and further the parties are not identically common in proceedings before the court (in a suit) and the arbitration agreement, a reference of disputes as a whole or in part can be made to the Arbitral Tribunal, more particularly, where the parties to an action are claiming under or through a party to the arbitration agreement? (Emphasis supplied) 155. The Supreme Court held that Grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) Besides all this, the Court has 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. Relevant portions of the judgment are reproduced hereunder: 73. A non-signatory or third party could be subjected to arbitration without their prior consent, but this would only be in exceptional cases. The court will examine these exceptions from the touchstone of 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 would have to examine whether a composite reference of such parties would serve the ends of justice. Once this exercise is completed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e award can be enforced against an entity who was not a party to the arbitration agreement or arbitration proceedings. The Supreme Court recognized the Group of Companies doctrine in modern business transactions. The Supreme Court held that (i) the circumstances in which the agreements were entered into would reflect the intention to bind both signatory and non-signatory entities within the same group. (ii) Factors such as relationship of a non-signatory to a signatory to the agreement, commonality of the subject matter, and (iii) the composite nature of the transaction are to be taken into consideration. (iv) The effort is to find the true essence of the business arrangement, and to unravel from a layered structure of commercial arrangements, the intent to bind a party who is not formally a signatory, but has assumed the obligation to be bound by the actions of the signatory. The Court held the award to be enforceable against a non-signatory entity. The relevant portion of the judgment is reproduced as under:- 23. As the law has evolved, it has recognised that modern business transactions are often effectuated through multiple layers and agreements. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat each company in a group of companies (a relatively modern concept) is a separate legal entity possessed of separate rights and liabilities 28. Explaining group of companies doctrine, Born states: the doctrine provides that a non-signatory may be bound by an arbitration agreement where a group of companies exists and the parties have engaged in conduct (such as negotiation or performance of the relevant contract) or made statements indicating the intention assessed objectively and in good faith, that the non-signatory be bound and benefited by the relevant contracts. While the alter ego principle is a rule of law which disregards the effects of incorporation or separate legal personality, in contrast the group of companies doctrine is a means of identifying the intentions of parties and does not disturb the legal personality of the entities in question. In other words: the group of companies doctrine is akin to principles of agency or implied consent, whereby the corporate affiliations among distinct legal entities provide the foundation for concluding that they were intended to be parties to an agreement, notwithstanding their formal status as non-signatories. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e used to financially support or re-structure the other members of the group. In such a situation, signatories and non-signatories have been bound together under the arbitration agreement. Relevant portions of the said judgment is reproduced hereunder: 10. Joinder of Canfina in the arbitral proceedings 10.1. Canara Bank raised an objection to the joinder of Respondent 2 CANFINA as a party to the arbitration proceedings. 10.2. As per the principles of contract law, an agreement entered into by one of the companies in a group, cannot be binding on the other members of the same group, as each company is a separate legal entity which has separate legal rights and liabilities. The parent, or the subsidiary company, entering into an agreement, unless acting in accord with the principles of agency or representation, will be the only entity in a group, to be bound by that agreement. Similarly, an arbitration agreement is also governed by the same principles, and normally, the company entering into the agreement, would alone be bound by it. 10.3. A non-signatory can be bound by an arbitration agreement on the basis of the group of companies doctrine, where the conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip between the party which is a signatory to the arbitration agreement; direct commonality of the subject-matter; the composite nature of the transaction between the parties. A composite transaction refers to a transaction which is interlinked in nature; or, where the performance of the agreement may not be feasible without the aid, execution, and performance of the supplementary or the ancillary agreement, for achieving the common object, and collectively having a bearing on the dispute. 10.7. The group of companies doctrine has also been invoked in cases where there is a tight group structure with strong organisational and financial links, so as to constitute a single economic unit, or a single economic reality. In such a situation, signatory and non-signatories have been bound together under the arbitration agreement. This will apply in particular when the funds of one company are used to financially support or restructure other members of the group. 10.8. The group of companies doctrine has been invoked and applied by this Court in Chloro Controls (India) (P) Ltd. v. Severn Trent Water Purification Inc. with respect to an international commercial agreement. Recent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s followed by the Supreme Court in the case of Chloro Controls India Ltd. v. Severn Trent Water Purification Inc. Ors., (2013) 1 SCC 641 , whereby the court held that under the group of companies doctrine, an arbitration agreement entered into by a company within a group of companies can bind its non-signatory affiliates, if the circumstances demonstrate that the mutual intention of the parties was to bind both the signatory as well as the non-signatory parties. The decision of the Supreme Court in Chloro Controls was followed in GMR Energy Limited v. Doosan Power Systems India Private Limited Ors., 2017(6) Arb LR 447 (Delhi) wherein GMR Energy Limited, a guarantor to GMR Chattisgarh Energy Limited ( GCEL ) was sought to be made a party to the arbitration proceedings between Doosan Power Systems India Private Limited, GMR Infrastructure Limited and GCEL. Relying on the decision in Chloro Controls, it was held that GMR Energy Limited was the alter ego of GCEL as (a) GCEL was a joint venture of the GMR Group with GMR Energy as the parent company; (b) GMR Energy and GCEL did not maintain their separate legal personalities and comingled corporate funds; (c) GMR Energy guara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution agreements; third, there was a common intention of all the parties, both signatories and non-signatories, to arbitrate. The award was challenged before the Court of Appeal of Paris, which upheld the award to confirm jurisdiction of the tribunal over the non-signatories. Ever since, the group of companies doctrine has been endorsed and applied by tribunals and national courts. For the group of companies doctrine to be invoked, tribunals will examine the corporate structure of the group. It is not enough for the signatory and the non-signatory members to belong to the same group. The doctrine can be invoked only if it is established that the signatory and the non-signatory have established a tight group structure, where the parent company holds the commanding role in the business strategy of the group, and several other subsidiaries have been set up to execute its business project, and constitute executive branches of the parent company. A tight group structure is also evidenced when several companies share intellectual property rights, assets, and financial or human resources including corporate name, offices and premises, bank accounts and trademarks. In the Dow Chemical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s who are signatory parties to the arbitration agreement, as well as the underlying substantive commercial contract. The general principle is that if one or more parties are not signatories to the arbitration agreement, the dispute cannot be referred to arbitration. Each company is a separate and distinct legal entity, and the mere fact that companies may have common shareholders or directors would not make the two companies a single entity. For a company to be bound by an arbitration agreement, it should be a signatory and party to the said agreement. If there is a dispute between a party to an arbitration agreement with other parties to the arbitration agreement, as also non-parties, the reference may be made only with respect to the signatories to the arbitration agreement ( S.N. Prasad, Hitek Industries (Bihar) Ltd. v Monnet Finance Ltd. (2011) 1 SCC 320. A non-signatory has however been held to be bound by an arbitration agreement by invoking various doctrines such as the principal-agent relationship, piercing the corporate veil, joint venture agreements, succession, implied consent, third party beneficiaries, guarantors, assignment, ( Kotak Mahindra Bank v S. Nagabhusha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration clause. The court relied on the doctrine of group of companies and held that a non-signatory affiliate of the appellant could invoke the arbitration clause as it was a party to the subsidiary agreements dated 8 March 2002 and 30 July 2004 and was directly affected by the disputes. Another illustration where the court invoked the group of companies doctrine was in Ameet Lalchand Shah Ors. v Rishabh Enterprises Anr, (2018) 15 SCC 678, where the parties had entered into four inter-connected agreements, and several parties were involved for setting up a solar plant, which was a single commercial project. The clauses in the four agreements would make them an integral part of the principal agreement. The principal agreement and the agreements for purchase of the power generating equipments, and for engineering, installation and commission of the plant contained arbitration clauses. However, the fourth agreement for purchase of the photovoltaic products for energising the solar plant did not contain an arbitration clause. The court took the view that even though there are different agreements involving several parties, these agreements are inter-related and are in pursu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an arbitration agreement signed by its agent or affiliate; or a merged entity may continue to prosecute arbitral proceedings commenced by one of its original constituent entities. In most jurisdictions, the necessary threshold for a third party beneficiary to be impleaded in an arbitration is to establish that the parties sought to confer a substantive benefit on the third party under the contract containing the arbitration agreement. Once this is established, the third party beneficiary will automatically be entitled to enforce the arbitration clause contained in the contract. (a) The group of companies doctrine Arbitration agreements may be extended to the parent or an affiliate company of a contractual party, provided that such non-signatory was involved in the discussions, execution, performance or termination of the contract in dispute. The doctrine has its origin in French arbitration practice of the 1970s. The doctrine was first formulated by an ICC Tribunal in Dow Chemical v Isover Saint Gobain wherein the tribunal decided that non-signatory companies in a group could rely on an arbitration clause in contracts between Isover St. Gobain and two Dow Chemical gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 163.3 Group of Companies doctrine can be invoked to bind a non-signatory entity where a Group of Companies exist and the parties have engaged in conduct, such as negotiation or performance of the relevant contract or made statements indicating the intention assessed objectively and in good faith, that the non-signatory be bound and benefited by the relevant contracts. 163.4 The Group of Companies doctrine will bind a non-signatory entity where an arbitration agreement is entered into by a company, being one within a group of companies, if the circumstances demonstrate that the mutual intention of all the parties was to bind both the signatories and the non-signatory affiliates. 163.5 A 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made statements indicating its intention to be bound by the contract. 163.9.5 A direct relationship between the signatory to the arbitration agreement and the non-signatory entity of the group; direct commonality of the subject-matter and composite nature of transaction between the parties. 163.9.6 The performance of the agreement may not be feasible without the aid, execution and performance of the supplementary or ancillary agreement for achieving the common object. 163.9.7 There is tight group structure with strong organizational and financial links so as to constitute a single economic unit or a single economic reality. 163.9.8 The funds of one company are used to financially support or restructure other members of the group. 163.9.9 The composite reference of disputes of fresh parties would serve the ends of justice. Findings of the Emergency Arbitrator on Group of Companies doctrine 164. The Emergency Arbitrator considered the objections of respondent No.2 in paras 110 to 146 of the interim order. The Emergency Arbitrator noted in para 118 of the interim order that a party to an arbitration agreement defined in Section 2(1)(h) of the Arbitration an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beneficiary of the investment by the Claimant. Section 6.4 of the SSA required FCPL to pay INR 14,990,000,000 to FRL in relation to the FRL Warrants within 3 Business Days of the SSA Closing Date; (f) statutory disclosures made by FRL to the public and statutory regulators of material terms of the Parties Agreements vide the disclosures of 12 August 2019 and 22 August 2019; (g) the coordinated conduct and efforts of the Respondents before as well as after 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 inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vations made by the Supreme Court in para 35 of Cheran Properties (supra) that 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 squarely applies to facts of the present case. 168. The Emergency Arbitrator has applied the well settled law laid down by the Supreme Court on the Group of Companies doctrine in Chloro Controls (supra), Cheran Properties (supra) and MTNL (supra) to the present case. All the tests laid down by the Supreme Court are satisfied in the present case and the Emergency Arbitrator has given nine reasons for applying the Group of Companies doctrine which are detailed in para 139 of the interim order. This Court is in complete agreement with the findings of the Emergency Arbitrator based on the well settled law laid down by the Supreme Court. 169. The respondents did not dispute the law laid down by the Supreme Court on Group of Companies doctrine in Chloro Controls (supra), Cheran Properties (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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Single Integrated Transaction would result in the petitioner acquiring control over respondent No.2 which would result in violation of the Foreign Exchange Management Act, 1999 and the Foreign Exchange Management (Non Debt Instruments) Rules, 2019 (FEMA FDI Rules). 173. The Emergency Arbitrator considered and rejected this contention in paras 137 138 of the interim order which are reproduced hereunder:- 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 the structure of the relationships among the Parties. I do not think there is much substance in any of these arguments. First, the stake was not a direct investment made by the Claimant, but one through an Indian Owned Controlled Entity. This is a permissible arrangement under Indian law and appears to have received 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution of the decrees as well as enforcement of the awards. This Court has formulated the affidavit of assets and income to be filed by the judgment debtor/award debtor in execution/enforcement cases. Conduct of the respondents 177. The hearing of this case commenced on 28th January, 2021 when this Court heard both the parties at length and directed both the parties to file written submissions and listed this case for hearing on 29th January, 2021. Both the parties filed their brief note of submissions by email on 28th January, 2021. 178. On 29th January, 2021, this Court continued the hearing. This Court considered the written submissions filed by both the parties. This Court directed respondent No.2 to file the additional note of submissions on the factual aspect and response to the written submissions of the petitioner relating to the facts. 179. Respondent No.2 filed additional legal submissions on 01st February, 2021. However, the respondents neither filed the submissions relating 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 partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id conditions whereupon the petitioner invoked the arbitration and filed an Emergency Relief Application before SIAC. The Emergency Arbitrator appointed by SIAC has restrained the respondents from violating the agreements. However, the respondents are continuing with the violation and, therefore, the petitioner has approached this Court for enforcement of the interim order of the Emergency Arbitrator. 183. The respondents have not disputed the breach of the agreements either before the Emergency Arbitrator or before this Court. Reference be made to para 235 of the interim order at page 128 which is reproduced herein below:- 235. Mr. Singh very properly did not attempt to argue that no contractual breaches had been committed by the Majority Respondents. Instead, he premised his submissions on the basis that I was to assume against [his clients] the way that the cause of action has been framed by the [C]laimant . Mr. Salve also adopted a similar stance and made his submissions on a demurrer basis without accepting the correctness of the Claimant s factual assertions and the jurisdiction of this Tribunal apropos FRL. He, nevertheless, candidly acknowledged: And we know ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as contrary to the well settled law by the Supreme Court. In NDMC v. Prominent Hotels Limited, 222 (2015) DLT 706, the petitioner raised pleas contrary to the well settled law declared by the Supreme Court. In both these cases, this Court held the conduct of the litigants to be contemptuous and the action was initiated against the litigants. Reference be made to paras 13, 24 and 26.2 of the Division Bench judgment of this Court in Nidhi Kaushik (supra). 187. Before closing, this Court would like to record that the Emergency Arbitrator has given fair opportunity to both the parties to submit their written pleadings and the oral arguments. The Emergency Arbitrator has recorded the respective contentions of the parties and has given a very detailed reasoned findings. The Emergency Arbitrator, Sh. V. K. Rajah, SC is a well known Jurist. In H.S. Bedi v. National Highway Authority of India, 2016 (227) DLT 129, this Court examined the scope of Section 209 of the Indian Penal Code which makes dishonestly 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 invok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e an affidavit of their assets as on today in Form 16A, Appendix E under Order XXI Rule 41(2) of the Code of Civil Procedure within 30 days. Respondent No.1, 2, 12 and 13 are directed to file an additional affidavit in the format of Annexure B-1 and respondents No.3 to 11 are directed to file an additional affidavit in the format of Annexure A-1 to the judgment of M/s Bhandari Engineers Builders Pvt. Ltd. v. M/s Maharia Raj Joint Venture, (supra) along with the documents mentioned therein within 30 days. 195. Show cause notice is hereby issued to respondents No.3 to 13 to show cause why they be not detained in civil prison for a term not exceeding three months under Order XXXIX Rule 2A(1) of the Code of Civil Procedure for violation of the order dated 25th October, 2020. Reply to the show cause notice be filed within two weeks. Rejoinder within two weeks thereafter. 196. The respondents are directed not to take any further action in violation of the interim order dated 25th October, 2020. The respondents are further directed to approach all the competent authorities for recall of the orders passed on their applications in violation of the interim order dated 25th Octobe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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