Clause 10 of SHA:
10. TRANSFER OF RETAIL ASSETS
10.1 As of the Execution Date, the Company has set up an aggregate of at least 1,534 (one thousand five hundred and thirty four) retail outlets/formats including without limitation the Small Store formats across India and such retail outlets/stores are an integral part of the business conducted by the Company representing a significant and substantial part of the business conducted by the Company. The Existing Shareholders and the Company further agree, covenant and undertake to FCL that the Company shall be the sole vehicle for the conduct of such current business comprising of a widespread network of the retail outlets/formats including without limitation the Small Store formats that the Company has established and is operating across India and consequently such business shall continue to be an integral part of the Company's business.
10.2 Accordingly, any sale, divestment, transfer, disposal, etc., of such retail outlets/ formats including without limitation the Small Store Formats shall be in accordance with this Agreement, and the company and the Existing shareholders covenant and undertake that during the subsistence of this Agreement, the company shall not transfer, or dispose off the Retail Assets except as otherwise mutually agreed between the Company, the Existing Shareholders and FCL in writing.
10.3 Notwithstanding anything contained herein, the Company and the Existing Shareholders agree that the Retail Assets shall not be transferred, Encumbered divested, or disposed of, directly or indirectly, in favour of a Restricted Person.
There is no dispute that one of the restricted persons included the Reliance Group.
|Order of Emergency Arbitrator dated 25.10.2020||Order of Single Judge Bench in I.A. No. 10376 of 2020 in CS(COMM) No. 493 of 2020 dated 21.12.2020|
|285. In the result, I award, direct, and order as follows: (a) the Respondents are injuncted from taking any steps in furtherance or in aid of the Board Resolution made by the Board of Directors or FRL on 29 August 2019 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||12.3 Thus the trinity of the principles for grant of interim injunction i.e. prima facie case, irreparable loss and balance of convenience are required to be tested in terms of principles as noted above. Since this Court has held that prima facie the representation of Amazon based on the pea that the resolution dated 29th August, 2020 of FRL is void and that on conflation of the FCPL SHA and FRL SHA, the 'control' that is sought to be asserted by Amazon on FRL is not permitted under the FEMA FDI Rules, without the governmental approvals, this Court finds that FRL has made out a prima facie case in its favour for grant of interim injunction. However, the main tests in the present case are in respect of "balance of|
|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/alienat e/encumber FRL's Retail Assets or the shares held in FRL by the Promoters in any manner without the prior written consent of the Claimant; (d) the Respondents are injuncted from issuing securities of FRL or obtaining/securing any financing, directly or indirectly, from any Restricted Person that will be in any manner contrary to Section 13.3.1 of the FCPL SHA; (e) the orders in (a) to (d) above are to take effect immediately and will remain in place until further order from the Tribunal, when constituted; and (f) the Claimant is to provide within 7 days from the date hereof a cross-undertaking in damages to the Respondents. If the Parties are unable to agree on its terms, they||convenience" and "irreparable loss". Even if a prima facie case is made out by FRL, the balance of convenience lies both in favour of FRL and Amazon. If the case of FRL is that the representation by Amazon to the statutory authorities/regulators is based on illegal premise, Amazon has also based its representation on alleged breach of FCPL SHA and FRL SHA, as also the directions in the EA order. Hence it cannot be said that the balance of convenience lies in favour of FRL and not in favour of Amazon. It would be a matter of trial after parties have led their evidence or if decided by any other competent forum to determine whether the representation of Amazon that the transaction between FRL and Reliance being in breach of the FCPL SHA and FRL SHA would outweigh the plea of FRL in the present suit. Further in case Amazon is not permitted to represent its case before the statutory authorities/Regulators, it will suffer an irreparable loss as Amazon also claims to have created preemptive rights in its favour in case the Indian law permitted in future. Further there may not be irreparable loss to FRL for the reason even if Amazon makes a|
|are to refer their differences to me qua EA for resolution; and (g) the costs of this Application be part of the costs of this Arbitration.||representation based on incorrect facts thereby using unlawful means, it will be for the statutory authorities/Regulators to apply their mind to the facts and legal issues therein and come to the right conclusion. There is yet another aspect as to why no interim injunction can be granted in the present application for the reason both FRL and Amazon have already made their representations and counter representations to the statutory authorities/regulators and now it is for the Statutory Authorities/Regulators to take a decision thereon. Therefore, this Court finds that no case for grant of interim injunction is made out in favour of the FRL and against Amazon. 13. Consequently, the present application is disposed of, declining the grant of interim injunction as prayed for by FRL, however, the Statutory Authorities/Regulators are directed to take the decision on the applications/objections in accordance with law.|
"1. The hearing has been conducted through video conference.
2. Arguments partly heard.
3. List for continuation of the arguments on 29th January, 2021 at the end of the Board.
4. The order be uploaded on the website of this Court forthwith."
On 29.01.2021, the following order was passed:
"1. The hearing has been conducted through video conference.
2. Issue notice. Learned counsels for respondents accept notice.
3. Further arguments heard from 02:45 PM to 04:30 PM.
4. List for continuation of the arguments on 01st February, 2021.
5. Both the parties have submitted brief note of submissions.
6. Learned senior counsel for the respondent No.2 submits that he shall file additional note of submissions on the factual aspect by tomorrow afternoon with advance copy to the counsel for the petitioner by tomorrow evening. Respondent No.2 shall also respond to the brief note of submissions of the petitioner relating to the facts.
7. The order be uploaded on the website of this Court forthwith."
On 01.02.2021, the following order was passed:
"1. Respondent No.2 has filed additional submissions to which the petitioner has filed the response.
2. Learned senior counsels for the respondents have concluded the oral arguments.
3. List for rejoinder submissions of the petitioner on 02nd February, 2021.
4. It is clarified that no further written submissions shall be filed by any of the parties."
"8. This Court is of the prima facie view that the Emergency Arbitrator is an Arbitrator; the Emergency Arbitrator has rightly proceeded against the respondent No.2; the order dated 25th October, 2020 is not a nullity; the order dated 25th October, 2020 is an order under Section 17(1) of the Arbitration and Conciliation Act. This Court is of the view that the order dated 25th October, 2020 is appealable under Section 37 of the Arbitration and Conciliation Act. This Court is of the clear view that the order dated 25th October, 2020 is enforceable as an order of this Court under Section 17(2) of the Arbitration and Conciliation Act. The detailed reasons shall be given in the reserved order.
9. This Court is satisfied that immediate orders are necessary to protect the rights of the petitioner till the pronouncement of the reserved order. In that view of the matter, the respondents are directed to maintain status quo as on today at 04.50 P.M. till the pronouncement of the reserved order. The respondents are directed to file an affidavit to place on record the actions taken by them after 25th October, 2020 and the present status of all those actions, within 10 days. All the concerned authorities are directed to maintain status quo with respect to all matters in violation of the order dated 25th October, 2020 and shall file the status report with respect to the present status within 10 days of the receipt of this order. The other prayers of the petitioner shall be considered in the reserved order.
10. Copy of this order be given dasti under signatures of the Court Master to counsels for the parties. Copy of this order be also given dasti under signatures of the Court Master to Mr. Kirtiman Singh, learned Central Government Standing Counsel who shall send the same to all the concerned authorities dealing with the actions initiated by the respondents in violation of the order dated 25th October, 2020. The petitioner shall send the list of all the authorities to Mr. Kirtiman Singh, learned Central Government Standing Counsel within three days."
"12. It is made clear that the observations made in this order are only a prima facie view for the purpose of grant of interim relief and shall not come in the way of the learned Single Judge in passing the final order in OMP(ENF)(Comm) No.17/2021 and needless to state that the order shall be passed uninfluenced by any observations made hereinabove."
"In the meantime, the NCLT proceedings will be allowed to go on but will not culminate in any final order of sanction of scheme."
"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.
190. The respondents have raised a vague plea of Nullity without substantiating the same. The interim order of the Emergency Arbitrator is not a Nullity as alleged by respondent No.2.
191. Combining/treating all the agreements as a single integrated transaction does not amount to control of the petitioner over FRL and therefore, the petitioner's investment does not violate any law.
192. All the objections raised by the respondents are hereby rejected with cost of Rs.20,00,000/- to be deposited by the respondents with the Prime Minister Relief Fund for being used for providing COVID vaccination to the Below Poverty Line (BPL) category - senior citizens of Delhi. The cost be deposited within a period of two weeks and the receipt be placed on record within one week of the deposit.
193. The respondents have deliberately and wilfully violated the interim order dated 25 th October, 2020 and are liable for the consequences enumerated in Order XXXIX Rule 2A of the Code of Civil Procedure.
194. 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 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."
i. Whether an Emergency Arbitrator's Award can be said to be within the contemplation of the Arbitration Act?
ii. Whether an order passed under Section 17(2) of the Arbitration Act, in enforcement proceedings, is appealable under Section 37 of the Arbitration Act?
"41. We, therefore, answer the first question by declaring that full party autonomy is given by the Arbitration Act to have a dispute decided in accordance with institutional rules which can include Emergency Arbitrators delivering interim orders, described as "awards". Such orders are an important step in aid of decongesting the civil courts and affording expeditious interim relief to the parties. Such orders are referable to and are made under Section 17(1) of the Arbitration Act."
The second question was answered thus:
"76. The second question posed is thus answered declaring that no appeal lies under Section 37 of the Arbitration Act against an order of enforcement of an Emergency Arbitrator's order made under Section 17(2) of the Act. As a result, all interim orders of this Court stand vacated. The impugned judgments of the Division Bench, dated 8th February, 2021 and 22nd March, 2021, are set aside. The appeals are disposed of accordingly."
"Heard learned senior counsel for the parties at length and carefully perused the material placed on record.
Taking into consideration the submissions advanced by the learned senior counsel for the parties and particularly the fact that the parties have approached the Singapore International Arbitration Centre for vacating the Emergency Award passed by the Emergency Arbitrator and the arguments in the said matter have been ssconcluded and the order is going to be pronounced shortly, we think it fit to balance the interest of both the parties by staying all further proceedings before the Delhi High Court for the time being. Ordered accordingly. We further direct to all the authorities i.e. NCLT, CCI and SEBI not to pass any final order for a period of four weeks from today. This order has been passed with the consent of both the parties.
List these matters after four weeks."
a. Stay the operation of the impugned Order dated 21.10.2021 passed by the Hon'ble Arbitral Tribunal.
b. Alternatively, pass an order allowing the Appellant to take steps pursuing the scheme, subject to the condition that it shall not invite the passing of any final orders of approval of the scheme by the NCLT.
"15. During the course of hearing, this Court time and again referred that when the subject matter of this appeal is pending sub-judice before the Hon'ble Supreme Court in Special Leave Petition (Civil) No. 13547- 48/2021 and infact, by virtue of order dated 09.09.2021 proceedings before this Court have been stayed and also directions have been passed to NCLT, CCI, SEBI to not pass any final order, then how interim relief, that too without there-being any hearing or any reply from side opposite on record, application for interim stay can be heard and orders be passed. Upon this, Mr. Harish Salve, learned senior counsel submitted in such eventuality, this Court may dismiss the application.
16. In view of the above, the application seeking interim stay being IA No. 14285/2021 (u/S 151 CPC) is accordingly dismissed."
I. Whether the orders dated 02.02.2021 and 18.03.2021, passed by the learned Single Judge in OMP (ENF) (COM) No.17 of 2021, are valid in law?
II. Whether the orders dated 29.10.2021, passed by the learned Single Judge in Arb. A (Comm.) No. 64 and 63 of 2021, is valid in law?
• Initially, this Court by order dated 22.02.2021, had allowed proceedings to continue before the NCLT without finalization of the scheme.
• Thereafter, learned Single Judge passed the 2nd impugned order on 18.03.2021, without considering the order of this Court dated 22.02.2021.
• Subsequently, the Division Bench in FAO (OS)(COM) No. 50 and 51 of 2021, had stayed the aforesaid order of the Single Judge, which was taken in appeal again before this Court.
• This Court finally disposed of the case, answering only two legal questions, without adjudicating on the merits of the matter.
• In the meanwhile, FRL and FCPL had moved the Arbitral Tribunal, for vacating the interim injunction granted by the Emergency Arbitrator.
• In view of the pendency of the aforesaid application before the Arbitral Tribunal, this Court again through interim order dated 09.09.2021, allowed continuation of proceedings before the NCLT, without final authorization on the scheme.
"192. All the objections raised by the respondents are hereby rejected with cost of Rs.20,00,000/- to be deposited by the respondents with the Prime Minister Relief Fund for being used for providing COVID vaccination to the Below Poverty Line (BPL) category - senior citizens of Delhi. The cost be deposited within a period of two weeks and the receipt be placed on record within one week of the deposit.
193. The respondents have deliberately and wilfully violated the interim order dated 25th October, 2020 and are liable for the consequences enumerated in Order XXXIX Rule 2A of the Code of Civil Procedure.
194. In exercise of power under Order XXXIX Rule 2A(1) of the Code, the assets of the 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 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."
"12. Thus, in order to punish a contemnor, it has to be established that disobedience of the order is "wilful". The word "wilful" introduces a mental element and hence, requires looking into the mind of a person/contemnor by gauging his actions, which is an indication of one's state of mind. "Wilful" means knowingly intentional, conscious, calculated and deliberate with full knowledge of consequences flowing therefrom. It excludes casual, accidental, bona fide or unintentional acts or genuine inability. Wilful acts does not encompass involuntarily or negligent actions. The act has to be done with a "bad purpose or without justifiable excuse or stubbornly, obstinately or perversely". Wilful act is to be distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It does not include any act done negligently or involuntarily. The deliberate conduct of a person means that he knows what he is doing and intends to do the same. Therefore, there has to be a calculated action with evil motive on his part. Even if there is a disobedience of an order, but such disobedience is the result of some compelling circumstances under which it was not possible for the contemnor to comply with the order, the contemnor cannot be punished. "Committal or sequestration will not be ordered unless contempt involves a degree of default or misconduct."
I. Setting aside of impugned orders dated 02.02.2021 (1st impugned Order) and 18.03.2021 (2nd impugned order) in OMP (ENF)(Comm.) No. 17 of 2021.
II. Setting aside of 3rd impugned order dated 29.10.2021 in Arb. A. (Comm.) No. 64 and 63 of 2021.The learned Single Judge shall reconsider the issues and pass appropriate orders on its own merits, uninfluenced by any observation made herein.
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