The Delhi High Court on Monday refused to restrain Amazon from writing to statutory authorities over Future Retail’s deal with Reliance Retail. Future Retail (FRL) had sought an ad-interim injunction against Amazon from writing to SEBI, CCI and other authorities to consider the Singapore arbitrator's interim order. The single judge bench of Justice Mukta Gupta said that the injunction can’t be placed on Amazon on account of potentially irreparable damage to the company.
However, it held Future Retail Limited’s (FRL) resolution approving its transaction with Reliance as valid. Statutory authorities are free to take a decision as per law, the bench said. The court held that prima facie, the suit filed by Future Retail was maintainable, and the emergency award was valid as well.
While the court has asked statutory authorities to take a decision as per law, the Future Retail-Reliance Retail deal has already received a nod from the Competition Commission of India (CCI).
"Consequently, the present application is disposed off, 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 the law," the court's order read.
Future Group and Amazon have been locked in a battle after the US-based company took FRL into an emergency arbitration in Singapore over alleged breach of contract.
In August this year, Future Group had reached an agreement to sell its retail, wholesale, logistics and warehousing units to Reliance Retail for Rs 24,713 crore by way of a slump sale.
On October 25, the Singapore International Arbitration Centre (SIAC) had passed an interim order in favour of Amazon barring FRL from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party. This essentially meant that the arbitrator barred Future Retail’s deal with Reliance.
Subsequently, Amazon wrote to market regulator SEBI, stock exchanges and Competition Commission of India (CCI), urging them to take into consideration the Singapore arbitrator's interim decision as it is a binding order, FRL had told the high court.
Amazon has been objecting to the deal because it bought a 49% stake in FRL’s holding company Future Coupons in August 2018, which gave it an indirect stake in Future Retail. The deal also gave Amazon the right to buy a partial or controlling stake in Future Retail between 3-10 years from the date of the deal. The deal also involved a non-compete agreement that barred 15 companies including Reliance from buying any stake in Future Coupons.
During the hearing, senior advocate Gopal Subramanium, who represented Amazon, said that under the SIAC rules emergency award is binding on the parties subject to a challenge. Until the parties get it set aside, it is like an order of the court and suppose the order was against me then this order would be with jurisdiction, he argued.
Subramanium submitted that all the defendants except Reliance were party to the arbitration and the promoters who were represented before the emergency arbitrator did not question the jurisdiction at all.
Senior advocate Harish Salve, appearing for FRL, said an arbitrator is one who is entitled to decide the dispute and an emergency arbitrator cannot act as an arbitrator.
Salve further said that Amazon has no right to control any voting in FRL and its representations are false and need to be injuncted. He had earlier argued that the order of the emergency arbitrator was of no value and has no efficacy in law.
He had said Amazon only held shares in FCL, a shareholder in FRL, and thus had no say in the affairs of FRL.
All three -- FRL, FCL and Reliance -- contended that if Amazon's claim -- that it indirectly invested in FRL by investing in FCL -- was accepted then it would amount to a violation of Indian foreign direct investment (FDI) laws which permit only 10% investment by a foreign entity in the multi-brand retail sector.
As per the SIAC interim order, a three-member arbitration panel needs to be set up within 90 days (from the date of the judgement) with one judge each being appointed by Future and Amazon, along with a third neutral judge.
With PTI inputs